Pharmacy Settles Whistleblower Case Involving Drug-Recycling Allegations

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For the sixth time this year, the national whistleblower law firm of Nolan & Auerbach, P.A. announces a whistleblower recovery on behalf of their clients. Collectively, the cases have returned in excess of $1.3 billion to the US Treasury to reimburse America’s health care programs. Today marks the unsealing of its client’s case against long-term care pharmacy Remedi Seniorcare, Inc., which has agreed to pay $1,279,575 to resolve civil allegations that it illegally distributed misbranded and adulterated drugs in interstate commerce. This is a unique and important whistleblower case alleging that, instead of disposing unused medications, the pharmacy unlawfully recycled, repackaged, and redistributed thousands of drugs to Medicare and Medicaid beneficiaries.

“Our client alleged that this pharmacy was playing a game of Russian roulette with medication destined for Medicare and Medicaid patients,” said founding partner Kenneth Nolan.

For the sixth time this year, the national whistleblower law firm of Nolan & Auerbach, P.A. announces a recovery on behalf of its client. Collectively, the cases have returned in excess of $1.3 billion to the U.S. Treasury to reimburse U.S. health care programs. Today marks the unsealing of its client’s case against long-term care pharmacy Remedi Seniorcare, Inc., which has agreed to pay $1,279,575 to resolve the whistleblower lawsuit filed in Federal Court, in the District of Maryland, Case No.: WMN-09-0131, United States ex rel. Thompson v. Woodhaven Pharmacy Services, LLC d/b/a Remedi Seniorcare, Inc. This is a unique and important whistleblower case alleging that, instead of disposing unused medications, the pharmacy unlawfully recycled, repackaged, redistributed and re-billed thousands of drugs to Medicare and Medicaid beneficiaries.

The whistleblower alleged that Remedi Seniorcare orchestrated a drug recycling scheme that placed people’s lives at risk. Every day, it would typically pick up twenty or more tote bags of unused medicine from long-term care facilities, ostensibly destined for disposal. However, instead of properly disposing the medication, the pharmacy would allegedly recycle the drugs, by removing pills and tablets from their packaging in unsterile environments, sorting the drugs into unsanitary bins, and inserting the medicine into new packaging. According to the whistleblower, the sorting process regularly comingled drugs with different expiration dates, lot numbers, and potency. These alleged practices caused federal and state government health care programs to pay for adulterated drugs.    

“Unfortunately, this is not the lone example of a long-term care pharmacy that allegedly valued profits over patient safety,” said former federal prosecutor and managing partner Marcella Auerbach. “We hope that this settlement shines a light on a business practice that we suspect is happening at long-term care pharmacies across the country.”

The whistleblower estimated the percentage of recycled medicine to be a staggering 80% of what was entrusted to Remedi Seniorcare for disposal. To ramp up these operations, the pharmacy supposedly hired outside “efficiency experts,” who made recommendations on how the pharmacy could further streamline its recycling scheme. By repackaging everything from blisterpacks to bulk syringes, the pharmacy was able to pocket funds that would have been spent on new medications.

“Our client alleged that this pharmacy was playing a game of Russian roulette with medication destined for Medicare and Medicaid patients,” said founding partner Kenneth Nolan. “She had the courage to stand up for our country’s oldest, sickest, and most vulnerable citizens, exposing a problem that needs to be resolved across the nation.”

The Food and Drug Administration is the agency responsible for protecting the health and safety of the American public by ensuring, among other things, that pharmaceutical s designed for use in humans are safe and effective for their intended uses and are labeled accurately and in compliance with the law. The federal law imposes numerous requires on the distribution of prescription drugs, including that the drugs are not misbranded or adulterated.

“When it comes to medication, expiration dates and potency levels should not be left to the whims of a backroom drug repackaging operation,” said partner Jeb White.    

Federal and State False Claims Acts allow private citizens with detailed knowledge of fraud to bring an action on behalf of the governments and to assist in the recovery of the governments’ stolen dollars. These statutes allow the government to recover three times the amount it was defrauded, in addition to civil penalties of $5,500 to $11,000 per false claim. Successful whistleblowers can receive between 15 and 30 percent of the governments’ recovery.

The settlement was achieved through the coordinated efforts of the U.S. Justice Department and other law enforcement entities including the Office of Inspector General of the U.S. Department of Health and Human Services. The federal government was particularly well-represented by Assistant U.S. Attorneys Thomas Corcoran and Tarra DeShields, U.S. Attorney’s Office in the District of Maryland. The exceptional federal government team also included Federal Bureau of Investigation Agent Jeremy Wilson, and Agent Tammy Miles and Assistant Inspector General for Legal Affairs Greg Demske, Office of Inspector General of the U.S. Department of Health and Human Services.

Nolan & Auerbach, P.A. is a national whistleblower law firm which focuses its practice on health care fraud cases under the False Claims Act. In 2010, the firm’s cases have collectively recovered more than $1.36 billion in civil settlements and related criminal fines. Notably, the firm is credited with bringing in three of the nation’s top five False Claims Act settlements in 2010.

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