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Insider Whistleblowing Case Against Omnicare Gathers New Evidence

 

The whistleblowing lawsuit against Omnicare Inc. has gathered more details and evidence this week thanks to new documents submitted.  In 2004, Omnicare, a pharmaceutical firm, bought Total Pharmacy.  In doing so, civil allegations charge that Omnicare paid kickbacks to Total Pharmacy to secure Total Pharmacy’s contracts with certain nursing homes.  However, federal anti-kickback laws establish that pharmacies cannot pay nursing home owners to persuade the home to buy the pharmacy’s products on Medicare or Medicaid dollars.

It is claimed that the settlement between Total Pharmacy and Omnicare agreed that $16 million of the buying price amounting to $32 million would be paid to secure the Total Pharmacy’s contracts with nursing homes operated by Philip and Morris Esformes, despite the pharmacy company’s change in ownership.  While the Esformes’ operated the nursing homes, the two also were said to control Total Pharmacy.  The new documents provided to the case include letters dated from 2004 between Morris Esformes’s headquarters and Joel Gemunder, CEO of Omnicare, discussing the sale of Total Pharmacy.  According to the lawsuit, Gemunder offered to pay $15 million for Total Pharmacy if three-year contracts with the homes were secured, $20 million for five-year contracts, or $25 million for ten-year contracts. In the end, Omnicare paid $25 million and Total Pharmacy was allowed to keep $7 million in accounts receivable, totaling a $32 million sale.

Other new documents provided include notes that Morris Esformes would agree to backdate the contracts between the pharmacy company and the nursing homes in order to avoid questionability.

The whistleblowing in this case came from two insiders.  One is Maureen Nehls, a pharmacy executive who was the vice president of pharmacy operations for Total Pharmacy.  The second is Adam Resnick, who was a consultant for Total Pharmacy at the time of the sale and who recently served jail time for his role in $10 million worth of check-kiting, ending in the collapse of United Federal Savings Back.  Resnick’s information has proven helpful in settling other cases between Omnicare and other nursing home chains, according to government authorities in Boston that won the settlement.

Source: Jackson, David and Gary Marx. “More details surface in nursing home case: Documents filed in whistle-blower suit allege $16 million in kickbacks for long-term pharmacy contracts.” The Chicago Tribune. 9 July 2010. http://www.chicagotribune.com/news/local/ct-met-nursing-home-suit-20100708,0,1110716.story.

 
 
 

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