The Chicago Tribune reported that the multi-billion dollar drug company Omnicare Inc. has agreed to settle a whistle-blower lawsuit involving millions of dollars in alleged kickbacks to one of Illinois’ most prominent nursing home families. Chicago nursing home operators Philip Esformes and his father, Morris Esformes, are not part of the settlement. They continue to fight federal court allegations that Omnicare paid them a kickback by significantly inflating the purchase price it paid in 2004 for a pharmacy company they purportedly controlled.
According to the lawsuit by a whistle-blowing former pharmacy company executive, Omnicare’s $32 million purchase of the pharmaceutical company linked to the Esformes family included roughly $16 million that was a kickback to secure long-term pharmacy contracts with nearly three dozen nursing homes the Esformeses operated or influenced.
Omnicare, which supplies medicine to millions of nursing home residents in facilities across the U.S., declined to comment but paying millions to settle the case speaks volumes.
The case was brought under the False Claims Act, which allows private citizens to file lawsuits against companies and individuals defrauding the government and recover funds on the government’s behalf.
Federal authorities in New York City charged 12 people — including several doctors — with scheming to submit more than $95 million in false Medicare claims. The 12 were charged with participating in Medicare fraud and money-laundering offenses. In addition to three medical doctors, they include a chiropractor and a doctor of osteopathy.
As part of the scheme, prosecutors said three Brooklyn health clinics paid kickbacks to Medicare beneficiaries and used the beneficiaries’ names to bill Medicare for $71 million worth of services that were never provided. Money laundering "is a critical part of large scale health care fraud schemes and often the most difficult piece to unravel." U.S attorney stated.
A second, related indictment charges that six defendants recruited Medicare beneficiaries to their Queens clinic by offering lunches and dancing classes in exchange for their Medicare numbers, which would be billed for medical services that they did not need and never received.
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Reuters had a brief article about a story that did not get much media attention. Harborside Healthcare and HHC Nutrition Services will pay $1.375 million to resolve charges of taking kickbacks from a supplier, the Justice Department. The department accused Harborside, which Sun Healthcare Group (SUNH.O) bought in 2007, of taking kickbacks from McKesson Corp (MCK.N) and its affiliate MediNet Corp in exchange for Harborside buying medical equipment from them.
"There is a related action pending against McKesson and MediNet in the Northern District of Mississippi that remains ongoing," the department said. "In addition, the United States’ investigation of similar conduct involving other DME (durable medical equipment) providers and nursing home chains is continuing."
The case was one that was broken by a whistleblower, who will receive $275,000 in reward. "We don’t comment on ongoing litigation," said McKesson spokeswoman Ana Schrank.