The U.S. Department of Justice and 28 states have reached an $8 million settlement this month with CVS Omnicare Inc., the nation’s largest nursing home pharmacy company, resolving allegations arising from a whistle-blower suit filed under the False Claims Act.
The United States alleged that Omnicare, in an effort to increase business efficiency and profit, designed and implemented an automated label verification system at certain locations that utilized a less specific drug code – known as “MEDID” – during its automated Stage II pharmacist verification process, instead of the more specific National Drug Code (NDC).
This system resulted in the submission by Omnicare of claims for generic drugs different from those actually dispensed to Medicare and Medicaid beneficiaries. It also resulted in the dispensing of drugs with patient-specific labels displaying the incorrect manufacturer or NDC. The government alleged that the false manufacturer and NDC information on the labels, and within Omnicare’s electronic dispensing information, affected Omnicare’s ability to properly track and, if necessary, conduct patient-level recalls of such drugs.
The whistler-blowers, in the underlying qui tam will receive more than $2 million as their statutory share of the recovery and to resolve their employment based claims in accordance with the False Claims Act. The civil lawsuit was filed in the District of New Jersey and is captioned U.S. et al. ex rel. Elizabeth Corsi and Christopher Ezzie v. Omnicare Inc.
CVS in a statement said the false submissions took place before it acquired Omnicare in 2015. Omnicare neither admitted nor denied wrongdoing as part of the settlement. But, with that being said, this is certainly not Omnicare’s first run-in with the law.
Omnicare Inc., agreed to pay $28.125 in million in October 2016 to resolve allegations that it solicited and received kickbacks from pharmaceutical manufacturer Abbott Laboratories in exchange for promoting the prescription drug, Depakote, for nursing home patients. According to the government, Omnicare disguised the kickbacks it received from Abbott in several ways. One of them was through supposed “grants” and “educational funding” through Omnicare’s “Re*View” program. Omnicare claimed the program was a health management and educational program but the government described it as simply a means by which Omnicare solicited kickbacks from pharmaceutical manufacturers to use their drugs on elderly nursing home residents.
Another lawsuit settled for $124 million in June, 2014, accused the company of allegedly offering improper financial incentives, known as kickbacks, to skilled nursing facilities in exchange for their continued selection of Omnicare as the main drug supplier for their elderly Medicare and Medicaid patients.
The case originated in 2010, when a former Omnicare pharmacy manager, Donald Gale, filed a qui tam whistleblower case against the company. Gale alleged that Omnicare improperly discounted some Medicare drugs for skilled nursing facility clients, and in exchange the nursing facilities continued to refer more lucrative business to Omnicare.
In November 2009, Omnicare paid $98 million to the federal government to settle five “qui tam” (whistleblower) lawsuits and government charges that the company had paid or solicited a variety of kickbacks.The company admitted no wrongdoing. The charges included allegations that Omnicare solicited and received kickbacks from a pharmaceutical manufacturer Johnson & Johnson, in exchange for agreeing to recommend that physicians prescribe Risperdal, a Johnson & Johnson antipsychotic drug, to nursing home patients.