Omnicare Agrees to Settle Whistleblower Lawsuit of Alleged Kickbacks, False Claims

Long-term care pharmaceutical provider Omnicare (NYSE:OCR) has agreed to settle a whistleblower lawsuit alleging it had paid a kickback when acquiring a pharmacy company and submitted false reimbursement claims to government health insurers, but has denied wrongdoing in court papers, reports Bloomberg Businessweek.

The Covington, Ky.-based nursing home drugs supplier acquired Total Pharmacy Services LLC in 2004 for $25 million. Whistleblower Maureen Nehls’ lawyer said in the 2007 lawsuit filing that the acquisition “held no assets, aside from a small inventory”—meaning most of the purchase price amounted to a kickback for long-term contracts.

Bloomberg reports:


Lawyers told a federal judge in Chicago yesterday that they reached a “settlement in principle” to resolve a 2007 lawsuit by whistle-blower Maureen Nehls, a court docket entry shows. The terms, if final, weren’t entered into the docket. U.S. District Judge John J. Tharp Jr. set a hearing for Sept. 25.

Nehls claims Omnicare’s $25 million purchase of Total Pharmacy Services LLC in 2004 included a kickback to one of its owners, Philip Esformes, and his father, Morris. That payment helped Omnicare win contracts with nursing homes owned or controlled by Morris Esformes and gave the company thousands of elderly and disabled customers, according to the complaint.

Nehls sued in Boston with [fellow whistleblower Adam] Resnick under the U.S. False Claims Act, which lets whistle-blowers sue on behalf of the government and share in any recovery. The U.S. Justice Department declined in January 2010 to join the case. They also sued under false claims laws in Illinois and Florida.


On May 11, Omnicare settled a case with the Justice Department for $50 million. The agency called it the “largest controlled substance settlement in history,” and said Omnicare gave nursing home residents medicines without a prescription, with missing prescription information or without documentation.

The former owners of Total Pharmacy Services LLC, Philip Esformes and his father, Morris Esformes, were not included in the settlement, Bloomberg notes.

“Philip Esformes understands that Omnicare made a business judgment to reach a settlement in this case,” said Philip Esformes’ lawyer, Michael Pasano, in an email to Bloomberg. “That settlement in no way speaks to Mr. Esformes’s position, and Mr. Esformes continues to emphatically emphasize he has done nothing wrong and is in no way liable in this matter.”

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Written by Alyssa Gerace

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