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Omnicare Pays $124M in Nursing Home Kickback Scheme
CINCINNATI, OH – The nation’s largest provider of pharmaceuticals to nursing homes, Omnicare, Inc., is shelling out a staggering $124.24 million to settle allegations of a brazen kickback scheme, the Department of Justice announced today. The scheme allegedly involved offering improper financial incentives to skilled nursing facilities in exchange for continued business supplying drugs to vulnerable Medicare and Medicaid beneficiaries.
Federal investigators claim Omnicare, headquartered in Cincinnati, Ohio, deliberately undercut costs to secure contracts, essentially buying patient referrals. “We will not tolerate health care providers who use illegal discounts to get business from nursing homes,” stated Assistant Attorney General Stuart F. Delery. “Schemes such as this one undermine the health care system and take advantage of elderly nursing home residents.” The practice isn’t about patient care; it’s about profit, plain and simple.
U.S. Attorney Steven M. Dettelbach for the Northern District of Ohio was equally blunt: “Omnicare provided improper discounts in return for the opportunity to provide medication to Medicare and Medicaid beneficiaries.” Dettelbach emphasized that nursing home pharmacy selection should be based on quality, service, and cost to the residents, not on backroom deals and illegal incentives. The government alleges Omnicare submitted false claims by entering into these below-cost contracts, effectively padding their profits at the expense of taxpayers and, more importantly, the elderly.
The $124.24 million settlement isn’t just going to the federal government. A significant $8.24 million will be distributed to various states that jointly funded the impacted Medicaid programs. This case hinges on violations of the Anti-Kickback Statute, which prohibits offering or receiving anything of value to induce healthcare referrals. The statute exists to ensure patient needs, not financial gain, drive healthcare decisions. This isn’t just about money; it’s about protecting the most vulnerable among us.
The case originated with two whistleblowers who came forward under the qui tam provisions of the False Claims Act. Donald Gale, a former Omnicare employee, will receive a hefty $17.24 million for his role in exposing the alleged fraud. The government’s investigation was a collaborative effort between the U.S. Attorney’s Office, the Justice Department’s Civil Division, the Department of Health and Human Services Office of Inspector General, and the National Association of Medicaid Fraud Control Units. This wasn’t a solo act; it was a coordinated takedown.
This settlement is part of the broader Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, launched in 2009. Since then, the Justice Department has recovered over $19.9 billion through False Claims Act cases, with over $13.9 billion tied to healthcare fraud. While the settlement represents allegations only, it sends a clear message: healthcare fraud will be pursued aggressively. The feds are watching, and they’re ready to come down hard on anyone who tries to game the system and exploit the elderly for profit.
Key Facts
- State: Ohio
- Agency: DOJ USAO
- Category: Fraud & Financial Crimes
- Source: Official Source ↗
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