Omnicare Agrees to Pay $120 Million Over Kickback Claim

Omnicare Inc. (OCR) agreed to pay $120 million to settle a whistle-blower lawsuit claiming it violated the U.S. anti-kickback law by giving discounts on certain Medicare services to nursing homes, the company said.

The company was accused in the lawsuit of providing the discounts in exchange for referrals of patients with government-reimbursable drug costs. The case, filed in 2010 by former Omnicare pharmacist Donald Gale, was set to begin trial next week in federal court in Cleveland.

The company will pay $120 million, plus attorneys’ fees, to settle Gale’s allegations, as well as certain claims raised in another case filed in New Jersey, Omnicare said today in a regulatory filing. The settlement was reached yesterday, the company said.

“The company reached an agreement in principle, without admitting liability,” according to the filing. The settlement requires approval from the U.S. Justice Department.

The lawsuit is one of multiple whistle-blower complaints alleging kickback violations against the Covington, Kentucky-based company, which provides drugs to nursing home patients. Omnicare paid a $98 million settlement to the U.S. in 2009 over a separate claim alleging that it paid or solicited kickbacks.

Suit Unsealed

The Ohio lawsuit, initially filed under seal, was unsealed in 2011 after the U.S. government decided not to join it. Gale continued to pursue the action on behalf of the U.S. Under the False Claims Act, the government still will receive most of the settlement. Gale will receive a fee of as much as 30 percent of the recovery.

Gale’s allegations targeted Omnicare’s practices in connection with Medicare Part A, which provides prescription drug coverage for patients in skilled nursing facilities, according to court papers.

Omnicare offered discounts and below-cost pricing for prescription drugs or supplies to the nursing facilities on their Part A patients in exchange for referrals of other patients that the company could bill against other public insurance programs, Gale alleged in the lawsuit.

The case is U.S. ex rel. Gale v. Omnicare Inc., 10-cv-00127, U.S. District Court, Northern District of Ohio (Cleveland.)

To contact the reporter on this story: Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.