Omnicare Pays $21 million to Settle Allegations of Medicaid Fraud in Massachusetts and Michigan in Whistleblower Action

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Omnicare, the country's largest provider of medications to nursing home residents, pays $21 million to resolve allegations that it fraudulently overcharged the Medicaid programs of Massachusetts and Michigan. The settlements resolve allegations raised by a former Omnicare financial analyst in a whistleblower lawsuit filed in 2003.

usual and customary charge to the general public

Washington, D.C. Whistleblower law firm Vogel, Slade & Goldstein (VS&G) announced today that Omnicare, Inc., the nation's leading provider of medications for nursing home residents, has paid $21,050,000.00 to settle allegations brought by a whistleblower that it defrauded the Medicaid programs of the Commonwealth of Massachusetts and the State of Michigan by knowingly charging more for drugs for the indigent than it charges private insurers.

Omnicare, headquartered in Covington, Kentucky, has paid $9,450,000 to settle claims based on its misconduct in Massachusetts and $11,600,000 to settle claims asserted by Michigan.

Massachusetts and Michigan are among a select group of states that expressly require drug providers like Omnicare to give the Medicaid program, the federal-state health care program for the indigent, their "most favored customer" price for pharmaceuticals. While the federal government agrees to contribute to state Medicaid programs only if the states pay no more than a pharmacy's usual and customary charge to the general public," some states like Michigan and Massachusetts go the extra step to protect taxpayer funds and require pharmacies to give Medicaid their best available price.

Despite these stringent state laws, according to the whistleblower complaint, Omnicare charged Medicaid patients in Massachusetts and Michigan (as well as other states) far higher prices for drugs than it charged private insurers, thereby reaping hundreds of millions of dollars in illegal profits at the expense of the taxpayers. For example, the whistleblower complaint alleges that in 2001 Omnicare's North Shore Pharmacy in Massachusetts was paid by private insurers an average of $27.75 per prescription, while its payments for Medicaid patients averaged $47.15 per prescription--67% higher. For Omnicare's top selling drug Zocor, the complaint alleges that Omnicare estimated in its corporate revenue projections that its profits from sales of Zocor to Medicaid patients would be almost four times greater than its profits from Zocor sales to private insurance beneficiaries.

The settlements follow upon several years of painstaking investigative work by the Medicaid Fraud Control Units in Massachusetts and Michigan. These investigations were triggered by the filing of a lawsuit (Civil Action No. 04C-2074 (N.D. Ill.)) under the whistleblower laws of Massachusetts and Michigan by a former Omnicare financial analyst who is represented by the law firm of Vogel, Slade and Goldstein. Under the state laws designed to root out fraud, as a whistleblower, the former Omnicare financial analyst will receive awards from both Michigan and Massachusetts for his contribution to the success of the claims.

VS&G Partner Shelley R. Slade, the whistleblower's attorney, commended both states' investigative teams for their excellent work substantiating the claims. She also noted that Massachusetts and Michigan should serve as examples for other states with Medicaid programs and for lawmakers and administrators watching over other government health care programs, such as Medicare. Ms. Slade stated that: "Now more than ever, with the social safety net established in the 1960's at severe fiscal risk, it is paramount that federal and state governments require pharmacies to give their best price to government programs for the poor, the disabled and the aged."

Since 2006, Omnicare has paid $197.5 million to settle False Claims Act lawsuits. The prior settlements, which were based on information brought forward by VS&G's client and several other whistleblowers, included allegations of Omnicare soliciting and paying kickbacks and switching patients onto different forms of medications than what was originally prescribed by their doctors, solely to maximize Medicaid reimbursement to Omnicare.

Media wishing to contact attorney Shelley Slade may do so by calling (202) 537-5903 or e-mailing sslade(at)vsg-law(dot)com.

About Vogel, Slade & Goldstein, LLP

Vogel, Slade & Goldstein, LLP, founded in 1990, is one of the oldest firms in the nation to specialize in the representation of whistleblowers under the federal and state False Claims Acts. Its three named partners have each been named as top whistleblower attorneys in our nation's capitol. For two decades, Vogel, Slade & Goldstein attorneys have handled some of the largest and most significant false claims cases in the nation, winning millions of dollars in rewards for whistleblowers.


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Abigail Graber
Vogel, Slade & Goldstein, LLP
(202) 537-5900
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