Lessons From Omnicare Settlement In 'Swapping' Cases

On June 25, the U.S. Department of Justice announced that it had settled with Omnicare Inc. in two matters alleging that kickbacks resulted from below-cost discounts offered to skilled nursing homes as an inducement to select Omnicare as their pharmacy provider. The cases, captioned United States ex rel. Gale v. Omnicare, and United States ex rel. Silver v. Omnicare, are both qui tam whistle blower cases that will be resolved by the $124 million settlement.

In Gale, which was filed by Donald Gale on Jan. 19, 2010, the relator alleged a so-called “swapping” kickback scheme in which Omnicare was alleged to have traded heavy discounts on prescription drugs covered under Medicare Part A in exchange for the right to service the nursing home’s residents whose drugs were covered under Medicaid and Medicare Part D. The DOJ declined to intervene in the action on April 8, 2011. Silver, which was filed by relator Marc Silver on March 4, 2011, alleged very similar facts to the Gale complaint. On Feb. 9, 2013, the DOJ declined to intervene in the action.

Article originally published in Law360 on July 21, 2014.

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