PharMerica Resolves Kickbacks Claims

PharMerica Corp., the second-largest nursing home in the United States has agreed to pay the government $9.25 million to resolve claims that the company solicited and received kickbacks from a major drug company in exchange for promoting a prescription drug to nursing home patients.

PharMerica, headquartered in Louisville, Kentucky, is accused of accepting the kickbacks from Abbott Laboratories in exchange for promoting Depakote, an Abbott drug used to treat epileptic seizures, manic or mixed episodes associated with bipolar disorder (manic-depressive disorder) and to prevent migraine headaches.

In May of 2012, the Justice Department announced a settlement agreement with Abbott for an astounding $1.5 billion, resolving global civil and criminal allegations that the drugmaker violated the False Claims Act by handing out kickbacks to nursing home pharmacies like PharMerica. Today’s settlement agreement resolves allegations over PharMerica’s role in accepting kickbacks.

Nursing homes rely on consultant pharmacists—like those employed at PharMerica—to review patient medical charts at least monthly so recommendations can be made to doctors about the drugs patients are taking. According to the Justice Department, PharMerica solicited and received kickbacks from Abbott in exchange for the pharmacy company’s recommendation that doctors at nursing homes prescribe Depakote to their patients.

The government claims that the alleged kickbacks were disguised as educational grants, rebates, and other forms of financial compensation. This is an oft-used tactic by fraudsters attempting to cover their tracks disguising the true intent of these ‘financial transactions’ (which basically amounts to bribes).

Today’s settlement resolves whistleblower allegations from two lawsuits filed in the Western District of Virginia by former Abbott employees Thomas Spetter and Meredith McCoyd. Both filed qui tam lawsuits, which allow private citizens to sue on behalf of the government for false claims. The whistleblower, or whistleblowers, and the government share in any recovery.

The amount of money a whistleblower receives as a reward varies and is usually based on a number of factors, such as the contribution of the relator to the investigation and the government’s involvement. For example, if the government decides to intervene in a case, the reward will normally be between 15 and 25 percent. If the government does not intervene in the case and the whistleblower and his or her whistleblower attorney are forced to handle the case independently, the reward could be as high as 30 percent of any recovered sum.

In the PharMerica case, the government intervened. As part of the resolution, Meredith McCoyd will receive approximately $1 million for filing the whistleblower lawsuit.

According to a Justice Department press release, roughly $6.75 million of the settlement will go to the U.S. government and approximately $2.5 million will be allocated to cover Medicaid program claims in states that decide to participate in the settlement (Medicaid is jointly funded by the federal and state governments). New Hampshire Attorney General Joseph Foster has said his state will receive roughly $160,000 from the multistate settlement.

Why is the PharMerica Whistleblower Lawsuit Important?

As you’ve frequently seen on this blog, these cases of kickbacks and health care fraud, unfortunately, happen all too frequently. A couple of things set this one apart from some of the others that get the attention from the news media:

For starters, elderly patients in nursing homes who suffer from dementia don’t have a lot of control over the drugs they are given. It is for this reason that they deserve (and depend on) unbiased judgment from the healthcare professionals that are treating them on a daily basis.

When financial incentives are presented to doctors treating our most vulnerable citizens, it muddies the waters, and that is putting it gently. They are no longer thinking about what is in the best interest of the patient, but instead what kind of money they can make by prescribing a drug.

It goes without saying that anytime a medical professional’s judgment is clouded by money instead of a patient’s health and wellbeing it is terrible. But there is something way more unnerving about kickbacks and bribes clouding the judgment of doctors in nursing homes. Our most vulnerable elders deserve far better.

The only way this kind of fraud is going to stop is if more whistleblowers come forward and expose those seeking to bilk money from the government at the expense of elderly folks trying to live out their last days in peace. We need more people like Thomas Spetter and Meredith McCoyd to stand up and say this kind of behavior isn’t going to happen on my watch.

Another reason that this case is so important is that Abbott Laboratories is a repeat offender—the company has paid doctors a number of times and been caught, and yet it still continues to pay kickbacks (how many big pharma companies can say they’ve paid out over $1.5 billion in civil and criminal allegations?).

July 2015: Omnicare and the government laid out a plan to settle claims that Omnicare accepted millions of dollars in kickbacks from Abbott Laboratories in an effort to have company doctors prescribe Depakote (yes, the same Depakote named in the PharMerica case). Covington, Kentucky-based Omnicare is the country’s largest supplier of pharmaceutical drugs to nursing homes.

Omnicare accepted the kickbacks, which were handed out with the expectation that Omnicare doctors would buy and recommend Depakote to treat behavioral disturbances in dementia patients, an indication for which the drug isn’t approved by the Food and Drug Administration. The kickbacks were hidden to appear as grants or educational funding (sound familiar?). Omnicare also accepted tickets to sporting events and let Abbott pay for lavish meetings in Florida.

December 2013: Abbott agreed to pay the government $5.475 million to resolve claims that it violated the FCA by paying kickbacks in an effort to get doctors to implant the company’s carotid, biliary and peripheral vascular products.

Carotid products treat circulatory disorders by increasing blood flow to the head. Vascular products are also treated circulatory disorders but for parts of the body. Biliary products treat obstructions that occur in bile ducts.

The allegations, made by two whistleblowers, claim Abbott knowingly paid prominent doctors kickbacks in the form of speaking engagements, teaching assignments, and vacation conferences in an effort to get the doctors to convince the hospitals they worked in to purchase Abbott products.

One last thing: this case is also a reminder that companies accepting kickbacks are as guilty as those making the illegal payments.

If you have firsthand knowledge of kickbacks being paid and received in an effort to influence care, it is in your best interest to contact an experienced whistleblower attorney to discuss your case. Speaking up about this fraudulent conduct helps protect the integrity of government health care programs and could result in a whistleblower reward for you.

If you’d like more information on becoming a whistleblower, contact Baum Hedlund Aristei & Goldman today.

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