Justice Department Discovers Multi-Million Dollar Kickback Scheme With Nursing Home Pharmacy, Others

The United States Department of Justice announced that the nation's largest nursing
home pharmacy, Omnicare Inc. of Covington, Kentucky, will pay $98 million, and
drug manufacturer, IVAX Pharmaceuticals of Weston, Florida, will pay $14
million to resolve allegations that Omnicare engaged in kickback schemes with
several parties, including IVAX.

Approximately $68.5 million of the settlement proceeds will go to the United
States, while $43.5 million has been allocated to cover Medicaid program
claims by participating states.

At the same time, the United States announced that it has intervened and filed
a complaint against two large nursing home chains, Mariner Health Care Inc.
and SavaSeniorCare Administrative Services LLC, both of Atlanta, and their
principals, Leonard Grunstein, Murray Forman, and Rubin Schron, for accepting
a kickback from Omnicare in return for pharmacy services contracts.

The settlement with Omnicare - the nation's largest pharmacy that specializes
in providing drugs to nursing home patients - resolves allegations that the
company solicited or paid a variety of kickbacks. The company allegedly
solicited and received kickbacks from a pharmaceutical manufacturer, Johnson &
Johnson (J&J), in exchange for agreeing to recommend that physicians prescribe
Risperdal, a J&J antipsychotic drug, to nursing home patients. J&J's kickbacks
to Omnicare took multiple forms, including rebates that were conditioned on
Omnicare engaging in an "Active Intervention Program" for Risperdal and
payments disguised as data purchase fees, educational grants, and fees to
attend Omnicare meetings. The government further alleged that Omnicare
regularly paid kickbacks to nursing homes by providing consultant pharmacist
services at rates below the company's cost and below the fair market value of
such services in order to induce the homes to refer their patients to Omnicare
for pharmacy services. The government also alleged that Omnicare solicited,
and IVAX paid, $8 million in kickbacks in exchange for Omnicare's agreement to
purchase $50 million in drugs from IVAX. These allegations against Omnicare
and IVAX, now a subsidiary of Teva Pharmaceuticals Industries, Ltd., are
detailed in a complaint unsealed today and originally filed under the qui tam
or whistleblower provisions of the False Claims Act in the District of

"These defendants broke the law to take advantage of our nation's most
vulnerable citizens - the elderly and the poor," said Tony West, Assistant
Attorney General for the Civil Division of the Department of Justice. "Illegal
conduct like this can undermine the medical judgments of health care
professionals, lead to patients being prescribed medications they do not need,
and drive up the costs of health care." Assistant Attorney General West
thanked the collaborative efforts of the Department of Justice's Civil
Division, the U.S. Attorney for the District of Massachusetts, the Office of
Inspector General of the Department of Health and Human Services, the Food and
Drug Administration Office of Criminal Investigations, and the Federal Bureau
of Investigation.

"Omnicare and other nursing home pharmacies specialize in providing drugs to
elderly patients who are often suffering from Alzheimer's Disease or dementia
and who have little or no control over the drugs they receive," said Michael
Loucks, Acting U.S. Attorney for the District of Massachusetts. "Today's
settlement provides a strong message to these pharmacies, as well as to
pharmaceutical companies and nursing homes, that the government will not
tolerate the payment of kickbacks which can distort proper medical judgment
and put profits ahead of good medical care."

As part of the settlement, Omnicare and IVAX have agreed to enter into
separate corporate integrity agreements with the Office of Inspector General
of the Department of Health and Human Services. Those agreements provide for
procedures and reviews to be put in place to avoid and promptly detect conduct
similar to that which gave rise to these matters.

In a separate action, the United States alleges that Omnicare, Mariner Health
Care, SavaSenior Care, Grunstein, Forman, and Schron conspired to arrange for
Omnicare to pay the nursing home chains $50 million in exchange for the right
to continue providing pharmacy services to the nursing homes, which together
constituted one of Omnicare's largest customers. According to the government's
complaint, these defendants attempted to disguise the $50 million kickback as
a payment to acquire a small Mariner Health Care business unit that had only
two employees and was worth far less than $50 million. After they became aware
of the government's investigation, Grunstein, Forman, and Schron allegedly
created backdated documents in a further attempt to hide the kickback. These
allegations are detailed in a separate complaint that was unsealed today.
Today's settlement resolves the allegations against Omnicare and IVAX; the
United States will proceed with its case against the Mariner Health Care
defendants, which was originally filed as a whistleblower action.For more, read the story.


Robert W. Carter, Jr. is a Virginia attorney whose law practice is dedicated to protecting the rights of the victims of nursing home and assisted living neglect and abuse in Richmond, Roanoke, Norfolk, Lynchburg, Danville, Charlottesville, and across Virginia.


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