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Attorney General Marty Jackley

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Omnicare to Pay Nearly $16.5 Million to Settle With State Medicaid Programs


FOR IMMEDIATE RELEASE :   Friday, August 29, 2014 
CONTACT:  Sara Rabern (605)773-3215   

Nation’s Largest Nursing Home Pharmacy Company to Pay Nearly $16.5 Million to Settle Allegations Involving False Billings to State Medicaid Programs

PIERRE, S.D – Attorney General Marty Jackley announced today that South Dakota has joined with other states and the federal government to settle allegations that Omnicare Inc., the nation’s largest provider of pharmaceuticals and pharmacy services to nursing homes, allegedly offered improper financial incentives to skilled nursing facilities in return for their continued selection of Omnicare to supply drugs to Medicaid recipients.  The total value of the settlement is $16.48 million.

 “The Attorney General’s Office will continue to recover money and investigate allegations of improper business practices to ensure that providers do not overcharge our state,” said Jackley.

The settlement resolves allegations that Omnicare entered into below-cost contracts to supply prescription medication and other pharmaceutical drugs to skilled nursing facilities and their resident patients to induce the facilities to select Omnicare as their pharmacy provider for nursing home residents covered by South Dakota’s Medicaid program.  The government alleges that this conduct violated the Federal Anti-Kickback Statute and resulted in the submission of false claims to the South Dakota Medicaid program.  The total portion of the settlement amount recovered by South Dakota is $171,666.66, of which $93,437.94 will be retained by the federal government as the federal Medicaid share. The remaining $78,228.72 will go to the state general fund to offset alleged Medicaid damages in this case.

The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs.  The Anti-Kickback Statute is intended to ensure that the selection of health care providers and suppliers is not compromised by improper financial incentives and is instead based on the best interests of the patient.

 The settlement resulted from a whistleblower lawsuit originally filed in the United States District Court for the District of New Jersey.  A National Association of Medicaid Fraud Control Units team participated in the settlement negotiations with Omnicare on behalf of the states and included representatives from the Offices of the Attorneys General for the states of California, Massachusetts, New York, Pennsylvania, South Carolina and Texas.

The South Dakota Medicaid Fraud Control Unit and the South Dakota Department of Social Services assisted in recovering the settlement money.