Former Sales Rep Awarded $1M of PharMerica $9.25M Kickback Settlement

The nation’s second-largest nursing home pharmacy is again paying big to settle yet another False Claims Act lawsuit. Former Abbott Labs employee, Meredith McCoyd, filed the initial allegations claiming that the Louisville-based PharMerica Corporation used kickbacks to boost sales of an anti-seizure medication. Ms. McCoyd collected a $1 million cash whistleblower reward for bringing the allegations.

Former Sales Rep Awarded $1M of PharMerica $9.25M Kickback Settlement

PharMerica Depakote Settlement Resolves Kickback Allegations

On Wednesday, the Department of Justice announced the $9.25 million settlement that partially resolves two lawsuits filed by former Abbott Laboratory sales representatives, Richard Spetter and Meredith McCoyd. The allegations claimed that, between 2001 and 2008, PharMerica filed false Medicare and Medicaid reimbursement claims and accepted kickbacks – including educational grants and rebates – in exchange for Abbott’s recommending that doctors prescribe the anti-epileptic drug, Depakote, to nursing home patients.

Drug-Related Kickbacks Put Vulnerable Patients at Risk says DiGuilio

Nursing homes depend on pharmacist consultants to suggest medications for patients based on a monthly review of the patients’ medical data. “Nursing home pharmacies accepting kickbacks from drug makers in exchange for prescribing certain prescription drugs puts vulnerable residents at risk for receiving unnecessary medications, corrupts medical decision making, and inflates health care costs,” said Nick DiGuilio of the U.S. Department of Health and Human Services’ Office of Inspector General.  “Our agency will continue to root out such corrosive practices from our health care system.”

Meredith McCoyd Awarded $1M for Blowing the Whistle

In May 2012, Abbott Laboratories agreed to a $1.5 billion settlement resolving criminal and civil liability on the role Abbot Laboratories played in the alleged kickbacks with PharMerica, Omnicare and other nursing home pharmacies. Out of the $9.25 million PharMerica settlement, the United States will collect $6.75 million. $2.5 million will go to pay state Medicaid program claims.

Ms. McCoyd and Mr. Spetter filed the initial claims under the qui tam provisions of the False Claims Act, which allows private individuals to sue on behalf of the government for false claims and share in 10-30% of any recovery.  Ms. McCoyd has been awarded $1 million of the federal settlement amount. Richard Spetter’s award has not yet been announced.

PharMerica Facing Case after Case of Heath Care Fraud Allegations

It’s been a long year for PharMerica. In May, the company paid $31.5 million to settle claims of Medicare Fraud. In August, an additional whistleblower case alleged PharMerica’s involvement in a kickback scheme with Amgen Inc. involving prescription drugs to treat anemia.

Since January 2009, the Department of Justice has reclaimed more than $25.2 billion through False Claims Act lawsuits. Over $16.1 billion of the recovered monies has come from cases involving federal health care fraud.

“The settlement announced  today should serve as a stark reminder to pharmaceutical companies and those with whom they do business that the Department of Justice and its investigative agencies will continue to monitor their activities,” said Anthony Giorno, U.S. Attorney of the Western District of Virginia.  “We owe nothing less in fulfilling our duty to ensure that nursing home residents are provided with the appropriate drugs based upon their needs rather than the business interests of the companies providing the drugs.”

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