David fights on after long-term care Goliath decides to bow out

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James M. Berklan, McKnight's Editor
James M. Berklan, McKnight's Editor
The headlines were big. Really big. And they involved a long-term care corporate giant settling yet another lawsuit. But they didn't tell the story I really wanted to know about. And that you probably want to know about, too.

I'm writing, of course, about the news that broke late last week about Omnicare agreeing to settle a whistle-blower lawsuit. Full terms of what likely will be a multi-million dollar payout aren't known yet.

But what is know is that, without admitting guilt, the nation's largest pharmacist for long-term care providers is paying to make an accusation of a big kickback go away. Meanwhile, some providers at the center of the storm are steadfastly declaring their innocence. They will not be a part of the settlement, their legal representatives have boldly stated.

I want to know what happens next with them. Could they be the lone Chinese student facing off against massive military tanks in Tiananmen Square?

Maureen Nehls, a former employee of Total Pharmacy Services LLC, alleged that Omnicare bought the company at an over-inflated price of $25 million in 2004. Why? All the better to get pharmacy contracts with nursing homes operated by Philip Esformes and his father, Morris — part owners of Total Pharmacy Services. (Note: I've also seen accounts pegging the purchase price at $32 million, with half of it allegedly being a kickback to get to the nursing home pharmacy contracts. One way or another, we're talking serious bucks.)

The Esformeses have vowed to continue fighting the allegations in federal court. They claim Omnicare, which isn't commenting, merely decided to settle the case as a “business decision.” Drawn out litigation can be expensive, even if a final verdict doesn't go against you.

Nehls' case was brought under the False Claims Act. That's where private citizens can file complaints against companies, and the federal government might or might not join in. Penalties can be tripled. It is one of the latest trends in healthcare litigation, and it is serious stuff.

Is this a case of a mega-corporation, weary from other multi-million dollar payouts, throwing up its hands and saying “no more” perhaps a bit too hastily?

It would appear the Esformeses, who adamantly maintain they have done nothing wrong, are betting on it.


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Daily Editors' Notes

McKnight's Daily Editors' Notes features commentary on the latest in long-term care news and issues. Entries are written by Editorial Director John O'Connor, Editor James M. Berklan, Senior Editor Elizabeth Newman and Staff Writer Marty Stempniak.