Omnicare is a nursing home and pharmaceutical services company that made nearly $60 million in profits last year, up from $31 million the year before. From the perspective of everyday people, corporations like Omnicare can seem untouchable. That might have been how whistleblower Donald Gale, a former employee, felt after filing a complaint against Omnicare in 2010. In the end though, Gale persevered and won his case. Omnicare said today in a regulatory filing that they have agreed in principle to pay $120 million to settle Gale’s claims. Gale himself will receive many millions of dollars from the settlement.
Donald Gale, a former Omnicare pharmacist, claimed that the company paid kickbacks to nursing homes using a scheme known as “swapping.” In this scheme, Omnicare would offer large prescription drug discounts to nursing homes with Medicare Part A inpatients. Medicare pays nursing homes a flat fee for Medicare Part A inpatients and Gale claims that the discount pricing that Omnicare offered nursing homes was far below fair-market value. Omnicare did this as a way of enticing the nursing homes to refer or “swap” their inpatients that were not Medicare Part A (mostly those that were in the Medicare Part D prescription drug program). Omnicare would then bill these Part D patients at full price for prescription drugs or any other pharmacy services. These “swaps” are in direct violation of the Medicare Anti-Kickback Statute and the False Claims Act.
As the general manager of a Wadsworth, Ohio Omnicare pharmacy between 1993 and 2010, Gale had first-hand knowledge of this alleged fraud. After his case was unsealed in 2011, it wasn’t certain that Gale would prevail. The U.S. Department of Justice did not join Gale’s case, which can sometimes suggest that the claims are simply not strong enough for a favorable outcome. Although his case was fiercely contested by Omnicare for nearly two years, Gale won and he will receive a whistleblower’s reward of between 25 and 30 percent of the total money paid by Omnicare to settle his case.
This is not the first time Omnicare has been accused of kickback violations. According to Bloomberg, Omnicare paid nearly $100 million in 2009 to settle similar claims that they paid out kickbacks to nursing homes in order to get patient referrals.
The case is U.S. ex rel. Gale v. Omnicare Inc.,10-cv-00127, U.S. District Court, Northern District of Ohio