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Omnicare Kickbacks Payments to Illinois Nursing Homes – Alleged Violation of Medicare/Medicaid

Posted Jul 12 2010 2:33pm

Omnicare is back in the news again over the same issues, drugs and potential kickbacks.  The last problems were with Johnson and Johnson with promoting Risperdal image via a whistle blower case.  This time it looks like price is the issue and profiteering. 

In this case there appears to be evidence of backdating contracts as well, not a good thing.  I think some of these cases are getting complex too as acquisitions and mergers take place too as what may not have been a kickback or violation of anti-trust could become one due to either a company buy out or merger.  BD 

Court documents filed this week add new details to a whistle-blower lawsuit alleging that the giant pharmaceutical firm Omnicare Inc. paid kickbacks to one of Illinois' most prominent nursing home families.

The new filing, which contains 164 pages of internal company records and other documents, is intended to bolster pending civil allegations that Omnicare significantly inflated the purchase price it paid in 2004 for a pharmacy company purportedly controlled by Chicago nursing home operators Philip Esformes and his father, Morris Esformes.

Omnicare's $32 million purchase of that company, Total Pharmacy, included roughly $16 million that was a kickback to secure long-term pharmacy contracts with nearly three dozen nursing homes the Esformeses operated or influenced, the lawsuit alleges. Federal anti-kickback laws prohibit pharmacies from paying nursing home owners to induce them to buy that pharmacy's products with Medicaid or Medicare dollars.

The lawsuit alleges that Gemunder offered to pay $15 million for Total Pharmacy if three-year contracts were in place with Esformes-controlled homes, $20 million if there were five-year contracts and $25 million if there were 10-year contracts. In the final sale, Omnicare paid the $25 million and let Total Pharmacy keep $7 million worth of accounts receivable, making the sale worth $32 million, according to the lawsuit.

The Esformeses own some of the best-known and most troubled nursing homes in the Chicago area, including Presidential Pavilion in Chicago and south suburban Burnham Healthcare, and have been the subject of law enforcement investigations in Florida, Missouri and Illinois.

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