The U.S. Department of Justice (DOJ) announced last month that PharMerica Corp. will pay $9.25 million to settle False Claims Act (FCA) whistleblower charges that it sought and received kickbacks from Abbott Laboratories in exchange for pushing a seizure medication on nursing home patients. The settlement resulted from involvement of Kentucky-based PharMerica, the second-largest nursing home pharmacy in the United States, in Abbott’s far-reaching FCA and kickback scheme relating to the anti-seizure medication Depakote. Abbott had entered into a $1.5 billion civil and criminal resolution in 2012.

The DOJ said PharMerica received kickbacks disguised as rebates, educational grants and other financial support in exchange for recommending that physicians prescribe Depakote to nursing home residents. Benjamin C. Mizer, head of the Justice Department’s Civil Division, said in a statement:

Elderly nursing home residents suffering from dementia have little control over the medications they receive and depend on the unbiased judgment of health care professionals for their daily care. Kickbacks to entities making drug recommendations compromise their independence and undermine their role in protecting nursing home residents from the use of unnecessary drugs.

Two former Abbott employees, Richard Spetter and Meredith McCoyd, filed separate cases against the pharmaceutical company in West Virginia in 2010 and 2007, respectively. While those charges were resolved in the global, May 2012 settlement, ancillary litigation against PharMerica continued. The nursing home pharmacy has now agreed to pay $9.25 million to settle the case. Ms. McCoyd will receive $1 million of the settlement for her role as relator. According to the DOJ, Abbott routinely gave PharMerica employees special grants, rebates and other perks for recommending that nursing home physicians prescribe Depakote as a treatment for seizures, mood disorders and migraines. Nick DiGiulio, of the U.S. Department of Health and Human Services’ Office of Inspector General, said in a statement:

Nursing home pharmacies accepting kickbacks from drugmakers in exchange for prescribing certain prescription drugs puts vulnerable residents at risk for receiving unnecessary medications, corrupts medical decision-making and inflates health care costs. Our agency will continue to root out such corrosive practices from our health care system.

As part of the settlement, the United States will receive $6.7 million while states participating in the settlement will get $2.5 million for Medicaid claims. PharMerica in May agreed to pay $31.5 million, including more than $4 million to a whistleblower, to settle claims of violations of the FCA and the Controlled Substances Act tied to dispensing painkillers without valid prescriptions.

The settlement featured a $23.5 million payout that ended an FCA suit filed in 2009 by pharmacy operations manager Jennifer Buth, (formerly known as Jennifer Denk), alleging that the pharmacy gave patients oxycodone, fentanyl and other drugs in nonemergency situations without first getting a doctor’s written prescription. That misconduct resulted in submission of improper billing claims to Medicare Part D from January 2007 to January 2013, according to the settlement agreement. Ms. Buth will receive $4.3 million for bringing suit. W. Scott Simmer, the managing partner of Simmer Law Group, who represented the first-filed relator in the suit, told Law360 that he hopes the case will send “a powerful signal” to people who care for the elderly. He added:

The important lesson from the PharMerica settlement is that both parties – the payor and the payee – may be liable under the Anti-Kickback Act. The most appalling thing about this case is that it shows how the trust of some of the most vulnerable Americans – the elderly – can be violated.

The United States is represented by Rick A. Mountcastle of the U.S. Attorneys Office, Western District of Virginia and Brian McCabe and Edward C. Crooke of the DOJ. The cases are both in the U.S. District Court for the Western District of Virginia.


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