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Aug 26, 2014 by |

Unprecedented $124 Million Settlement On A Whistleblower Claim

ATTORNEY NEWSLETTER

Astonishingly, even before completing discovery, or trial, one of two federal fraud suits against Omnicare has returned an unprecedented settlement, a staggering $124 million. The two qui tam suits filed against Omnicare are: United States ex rel Gale v. Omnicare, Inc., and United States ex rel Silver v. Omnicare, Inc., et al.

Omnicare is the largest pharmaceutical provider in North America, that caters to the elderly community in convalescent homes. According to each complaint, Omnicare devised a kickback scheme that padded Omnicare’s bottom line—at the expense of the elderly, and also the federal treasury. Two former Omnicare employees with original knowledge of the fraud, sued under the False Claims Act, 31 U.S.C. § 3729 et seq.

The False Claims Act authorizes ordinary citizens having original knowledge of fraud, to prosecute the malfeasance on behalf of the government. The False Claims Act requires notice to the U.S. Department of Justice prior to filing suit in camera and gives the federal government the sole discretionary right over sixty days whether to join a suit, or decline intervention. In cases where the federal government declines intervention, the False Claims Act permits the citizen to prosecute the suit via private counsel on behalf of the United States of America. While such a move might spell career suicide in most cases, the False Claims Act has been amended numerous times since 1863, and in its present incarnation, handsomely rewards any citizen brave enough to blow the whistle on a fraudulent employer.

In this case, the two qui tam suits allege that Omnicare used statutorily required fees it was mandated to charge nursing homes accepting Medicare, as a carrot, to entice these convalescent homes to exclusively partner with Omnicare for its pharmaceutical needs, by waiving these required fees upfront. Omnicare created the illusion of philanthropy, when in fact they merely transferred the cost of charging fees to the end, after luring yet another train of vulnerable elderly nursing home residents, where Omnicare more than compensated for their upfront losses, by using the elderly as a pretext to false-bill Medicare for unnecessary surgical procedures and outdated/toxic pharmaceutical drugs.

While Omnicare enriched itself for a time with its false-billing scheme, it was the elderly, and the industrious federal taxpayer who lost out in the end. That is why Congress since the founding of the nation during the Revolutionary War enacted the very first whistleblower law. For nearly three centuries since, the government has moved to aggressively fight those who would dare enrich themselves at the government’s expense, and think that they could do so with impunity. Here, two Omnicare employees risked their very careers and well-being to expose Omnicare’s kickback scheme.

While the decision to become a whistleblower against a current employer is not easy, and often spells career suicide, the False Claims Act provides a handsome reward for those brave enough to sue. By law, the False Claims Act requires a payout of 15% to 33% of the total amount recovered from settlement or judgment, based on whether or not the government joins or declines intervention in the action. In the case of former Omnicare pharmacist Donald Gale (United States ex rel Gale v. Omnicare, Inc.), this means that for his trouble exposing Omnicare’s fraud, he will get $17 million. The states adversely impacted by Omnicare’s fraud receive $8.24 million, and the remainder goes to the federal treasury.

Evans Law Firm, Inc. litigates in an array of legal fields including elder law, employment law, whistleblower/false claims, consumer fraud class actions, insurance/banking fraud, consumer product liability, and personal injury cases. If you believe your employer is involved in an illegal kickbacks scheme, or is defrauding the federal government, you are invited to contact the Evans Firm, Inc. in San Francisco, California for a free initial consultation. You can reach the Evans Law Firm, Inc. at (415) 441-8669, or info@evanslaw.com.

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