The Chicago Tribune had an article about new details in the OmniCare kickback scheme that included many of the country’s for profit nursing home chains. Omnicare — which supplies medicine to roughly 1.4 million nursing home residents in facilities across the U.S. and enjoys an 85 percent share of this market. Court documents add new details to a whistle-blower lawsuit alleging that the giant pharmaceutical firm Omnicare Inc. paid kickbacks to Illinois’ most prominent nursing home families.
The new filing, which contains 164 pages of internal company records and other documents, is intended to bolster pending civil allegations that Omnicare significantly inflated the purchase price it paid in 2004 for a pharmacy company purportedly controlled by Chicago nursing home operators Philip Esformes and his father, Morris Esformes.
Omnicare’s $32 million purchase of that company, Total Pharmacy, included roughly $16 million that was a kickback to secure long-term pharmacy contracts with nearly three dozen nursing homes the Esformeses operated or controlled
The new documents include copies of handwritten notes from a March 2004 meeting at Morris Esformes’ Lincolnwood headquarters between Omnicare CEO Joel Gemunder and Morris Esformes to discuss the sale of Total Pharmacy to Omnicare. Gemunder offered to pay $15 million for Total Pharmacy if three-year contracts were in place with Esformes-controlled homes, $20 million if there were five-year contracts and $25 million if there were 10-year contracts. In the final sale, Omnicare paid the $25 million and let Total Pharmacy keep $7 million worth of accounts receivable, making the sale worth $32 million.
The new court filing also includes other handwritten notes taken two days after the meeting that allegedly show Morris Esformes agreed to backdate nursing home pharmacy contracts "in order to avoid the appearance of impropriety," according to the lawsuit.
Philip and Morris Esformes, who are listed as part-owners of 28 nursing homes in Illinois and Florida, and had ties to others in Missouri, have not been charged with any crime in the sale of Total Pharmacy.
The whitsle blowers include two industry insiders: pharmacy executive Maureen Nehls, who served as vice president of pharmacy operations for Total Pharmacy, and former health care dealmaker Adam Resnick, a consultant to Total Pharmacy at the time of the sale.
The Tribune in April reported that the Esformeses were embroiled in what prosecutors called a "horrific" patient-brokering scheme in which unsuspecting nursing home residents were shuttled to and from a local psychiatric hospital for unnecessary treatments.
Government authorities in Boston have won settlements in federal court based on Resnick’s information about other deals involving Omnicare and separate East Coast nursing home chains including Mariner and SavaSeniorCare owned and operated ath time by Murray Forman and Leonard Grunstein.
The False Claims Act allows private citizens to file lawsuits against companies and individuals defrauding the government and recover funds on the government’s behalf.