Whistleblower: Massive Medicare Fraud at CVS’ Omnicare – Feds: That’s True, We’re Intervening

The government has just decided to intervene in a whistleblower’s False Claims Act lawsuit against Omnicare. The relator’s (whistleblower’s) complaint includes multiple allegations of Medicare and Medicaid fraud by the pharmaceutical services provider.

Whistleblower: Massive Medicare Fraud at CVS’ Omnicare – Feds: That’s True, We’re Intervening

The whistleblower who initiated the case is an Omnicare pharmacist.

The whistleblower alleges that Omnicare used an automated prescription filling system to fulfill prescriptions that had not been authorized by a physician. Omnicare’s computer system, called Cycle Fill, allegedly allows for prescriptions to be renewed even after the cycle prescribed by the treating doctor has run out. So, if a doctor has prescribed a drug for a two-month cycle, Omnicare’s systems allow for the prescription to be renewed past that period, without requiring a re-assessment of the patient’s needs or a new prescription.

Administering medication that has not been prescribed by a physician not only triggers inappropriate and fraudulent Medicare and Medicaid reimbursements, but also it can put patients at serious risk.

Allegations of Nationwide Healthcare Fraud by Omnicare

The False Claims Act (FCA) complaint against Omnicare was filed by the whistleblower on behalf of the federal government and California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Rhode Island, Tennessee, Texas, Vermont, Virginia, Washington, Wisconsin, and the District of Columbia. According to the lawsuit, Omnicare systematically violated the federal False Claims Act and various state False Claims Acts.

Omnicare and its parent company CVS are no strangers to fraud and multimillion-dollar settlements.

According to Violation Tracker, Omnicare alone has paid over $415 million to settle healthcare fraud allegations since 2004. Omnicare whistleblowers have received massive awards for exposing the misconduct. In 2014, pharmacist David Gale received a $17 million award after uncovering illegal kickbacks allegedly paid by Omnicare to nursing homes in exchange for patient referrals to the company’s prescription services. The total settlement paid by the defendant in that case amounted to $124 million.

The whistleblower in this case claims he tried to raise concerns about flaws in Omnicare’s system internally, but compliance officers ignored him. He proceeded to alert the government and file a complaint.

Headquartered in Ohio, Omnicare was acquired by CVS, for $12.7 billion, in 2015. It is the largest provider of pharmaceutical services in assisted living and skilled nursing facilities in the U.S., operating in forty-seven states and the District of Columbia.

According to the whistleblower’s False Claims Act lawsuit, Omnicare made and caused to be made,

“False records and the submission of false claims to the United States government. . . including the Medicare program, Medicaid program, and related government programs. The false records and false claims at issue were used to obtain reimbursement for prescription (legend) drugs dispensed by Omnicare without valid prescriptions,” including “drugs that treat a wide range of medical conditions affecting the elderly and disabled, including but not limited to cardiovascular conditions, central nervous system disorders, endocrine conditions, immune system disorders, mental health conditions, neoplastic disorders, and respiratory conditions. Some of these legend drugs are controlled substances.” The government’s complaint in intervention does not allege abuses of narcotic drugs.

The Justice Department says in its complaint,

“Omnicare, and its parent company CVS, allowed Omnicare pharmacies to dispense prescription drugs indefinitely to individuals living in these residential facilities based on prescriptions that had expired, were out of authorized refills, or were otherwise invalid.

Omnicare disregarded prescription refill limitations and expiration dates—which would have triggered consultation with residents’ treating physicians to evaluate whether the dispensed drugs should be renewed—and instead continued to push drugs out the door based on stale, invalid prescriptions. Rather than performing its basic professional obligation as a pharmacy to obtain a new prescription after an old one expired or ran out of refills, Omnicare simply assigned a new number to the old prescription and kept on dispensing, as if a new prescription had been obtained.”

Omnicare Received Billions of Dollars from Medicare and Medicaid in Connection with Potentially Fraudulent Claims

The complaint refers abundantly to Omnicare’s spectacular profits deriving from some of its alleged illegal practices.

“According to its 2014 10-K, Omnicare's ‘customer mix’ is ‘heavily concentrated in the senior market,’ and Omnicare claims to have ‘a high level of insight into geriatric pharmaceutical care.’”

The initial complaint also says Omnicare filled approximately 111 million prescriptions for residents of facilities in 2014, and it derived approximately 74% of its 2014 total net sales from those prescriptions. In 2014, Omnicare's total net sales were $6.4 billion, with approximately $4.7 billion coming from the sale of legend [prescription] drugs to elderly and disabled residents of facilities.

A Pharmacist Turned Whistleblower

The whistleblower is a licensed pharmacist. He claims he discovered the alleged misconduct when a third-party payor audited one of the facilities serviced by Omnicare in his region. “The third-party payor asked the facility to provide copies of prescriptions associated with drugs dispensed and delivered to it through Omnicare's automated cycle fill process,” the complaint states.

“When responding to this private payor's audit request, the facility found it did not have prescriptions for many of those drugs, and therefore asked the [whistleblower] to search Omnicare's records for the prescriptions. However, when the Relator searched Omnicare's records, he could not find the necessary prescriptions either. He could not find them because Omnicare's automated cycle fill computer system had automatically created new prescriptions even though the prescriber had never authorized the additional quantity of medication. In other words, Omnicare's automated cycle fill system caused legend drugs to be dispensed without a valid prescription.”

According to the complaint, Omnicare’s flawed system may have impacted hundreds of thousands of prescriptions over the years. Under the False Claims Act, whistleblowers typically receive between 15 and 30 percent of the government’s recoveries as a reward for coming forward. If the government’s lawsuit reaches a favorable verdict or settlement, he could receive a significant whistleblower award.

One of the lawyers representing the whistleblower is noted False Claims Act lawyer and bestselling legal author Brian Mahany. Mahany is known for record setting multi-billion and multi-million dollar high profile legal victories for his clients in the whistleblower arena.

Upon the announcement of the DOJ’s intervention in the case against Omnicare, Mahany commented,

“We are elated that the Justice Department chose to intervene in our client’s complaint. Today's intervention is proof that protecting taxpayers and vulnerable assisted living facility residents remains a priority of the Justice Department.”

The government’s case is filed in the Southern District of New York. The original complaint by the whistleblower was filed in 2015. The Justice Department’s Complaint-in-Intervention was filed on December 17th, 2019. Omnicare has not yet filed an answer to the complaint.

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