PharMerica to Pay $31.5 Million to Settle Lawsuit Alleging Violations of Controlled Substances Act And False Claims Act

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PharMerica Corporation has agreed to pay the United States $31.5 million to resolve false claims lawsuit. The case was originally filed by Nola J. Hitchcock Cross of Cross Law Firm on behalf of Jenny Buth, a pharmacist formerly employed by PharMerica as its Pharmacy Operations Manager in Pewaukee, Wisconsin.

WIsconsin False Claims Attorneys

Cross Law Firm

“Blowing the whistle can be very rewarding,” said Attorney Hitchcock Cross, “both financially and ethically.”

Six years after Jenny Denk Buth’s False Claims Act case was filed under seal in Milwaukee, Wisconsin by her attorney, Nola J. Hitchcock Cross of Cross Law Firm, PharMerica Corporation has agreed to pay the United States $31.5 million to resolve her lawsuit., in which the government subsequently joined, alleging that PharMerica submitted false claims to Medicare for drugs dispensed without valid prescriptions in violation of the Controlled Substances Act. The Justice Department announced the settlement late yesterday afternoon.

PharMerica contracts with nursing homes and skilled nursing facilities to dispense medications to their residents, most of whom are Medicare beneficiaries. Many of the medications dispensed by PharMerica are Schedule II drugs regulated by the Controlled Substances Act, such as oxycodone and fentanyl, that are tightly controlled because they can cause significant harm if used improperly and they have been found to have a high potential for abuse.

After investigation, the government filed a complaint in intervention with Buth’s lawsuit in Milwaukee, Wisconsin. The government’s complaint alleged that PharMerica’s conduct violated the Controlled Substances Act by dispensing Controlled II drugs without confirming that a physician had first made a medical judgment as to whether the narcotics were medically necessary for the Medicare beneficiaries who were receiving them in nursing homes and skilled nursing facilities. PharMerica has agreed to pay $8 million to resolve these allegations.

In addition, PharMerica has agreed to pay $23.5 million to resolve allegations in the government’s complaint in intervention to the effect that PharMerica violated the False Claims Act by knowingly causing the submission of false claims to Medicare Part D for improperly dispensed Schedule II drugs.

The case was originally filed by Buth, a pharmacist formerly employed by PharMerica as its Pharmacy Operations Manager in Pewaukee, Wisconsin. The False Claims Act authorizes private parties to sue on behalf of the United States and to receive a portion of any recovery, generally between 15% to 25% if the government intervenes, and up to 30% if the government does not intervene. Buth will receive more than $4.3 million as her share of the settlement with the United States. In addition, she has separately settled her claim that she was fired in conjunction with her attempts to stop the alleged false claims.

“Blowing the whistle can be very rewarding,” said Attorney Hitchcock Cross, “both financially and ethically.” When Buth blew the whistle on PharMerica Corporation by filing a False Claims Act case under seal six years ago, she did so with a motivation of protecting nursing home and skilled nursing facility residents and stopping violations of the Controlled Substance Act, said Hitchcock Cross.

As a new pharmacist, Buth had a heightened concern for the elderly and disabled population who were the primary recipients of these controlled narcotics. She initially went to the Drug Enforcement Administration about her concerns and later came to Cross Law Firm which filed a False Claims Act claim for her. The Act, often dubbed the “Lincoln Law” since it dates back to fraud committed during the Civil War, allows “Relators” to file claims on behalf of the United States government for false claims submitted to and paid by the government. About 30 states, including Wisconsin, also have false claims acts.

The case is particularly significant both because it addresses the Controlled Substances Act and because it claims damages sustained when claims are submitted under Medicare Part D.

“It has been a long six years and a terrific amount of work by the Department of Justice, the U.S. Attorneys’ office and our law firm, but both the public and our client are big winners financially and protections will be in place for vulnerable Medicare recipients ,” said Hitchcock Cross. She emphasized that persons with knowledge of fraud against the public should not hesitate to blow the whistle by filing False Claims Act or other whistle-blower reward claim. “The rewards can be enormous,” Hitchcock Cross explained.

Buth is particularly gratified, according to her attorney, because, in addition to the financial settlement, PharMerica Corporation has entered into a Corporate Integrity Agreement with the government. The “CIA” as it is called, requires PharMerica to implement internal compliance reforms and, for the next five years, to submit its claims for Medicare payments for independent review.

Attorney Hitchcock Cross praises the efforts and keen analysis of Assistant U.S. Attorney Stacy Gerber Ward in the U.S. Attorney’s Office of the Eastern District of Wisconsin and trial attorney Jeff Wertkin in the Department of Justice in Washington, D.C., as well as the agents of the HHS-OIG and the DEA.

The claims resolved by the settlement are allegations only; there has been no determination of liability.
The lawsuit is captioned U.S. ex rel. Denk v. PharMerica Corp., No. 09-cv-720 (E.D. Wis.).

Nola Hitchcock Cross is the founder of Cross Law Firm that has earned a national reputation for successful representation of whistleblowers in federal courts across the United States. The firm currently has three nation-wide False Claims Act cases out from seal and in litigation, two in healthcare and one in defense contracting. The firm has obtained several prior large recoveries for their clients and the taxpayers.

For more information about the firm’s attorneys, FCA settlements and FCA experience, see with offices in Milwaukee and Waukesha, Wisconsin and satellite offices in Chicago and Wausau, WI.

MEDIA CONTACTS: Nola J. Hitchcock Cross, Cross Law Firm, 845 N. 11th Street, Milwaukee, WI 53233; njhcross(at)crosslawfirm(dot)com 414-224-0000

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