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United States ex rel. Litwiller v. Omnicare, Inc.

United States District Court, N.D. Illinois, Eastern Division

April 14, 2014

UNITED STATES OF AMERICA and THE STATE OF ILLINOIS, ex rel., ALAN J. LITWILLER, Plaintiff-Relator,
v.
OMNICARE, INC., Defendant.

MEMORANDUM OPINION AND ORDER

ROBERT M. DOW, Jr., District Judge.

Plaintiff-Relator Alan J. Litwiller brings a three-count complaint against his employer, Omnicare, Inc., alleging violations of the federal False Claims Act, the Illinois False Claims Act, and the Illinois Insurance Claims Fraud Prevention Act. Litwiller maintains that Omnicare submitted false statements and records to the United States and the State of Illinois in violation of federal and state anti-kickback statutes. This matter is before the Court on Defendant's motion to dismiss Plaintiff-Relator's complaint [28]. For the reasons set forth below, the Court grants in part and denies in part Omnicare's motion to dismiss [28].

I. Background[1]

A. Procedural Background

Plaintiff-Relator Litwiller ("Relator" or "Litwiller") filed his complaint under seal on December 19, 2011, alleging violations of federal False Claims Act ("FCA"), the Illinois False Claims Act ("IFCA"), and the Illinois Insurance Claims Fraud Prevention Act ("IICFPA"). On March 23, 2013, the United States filed a notice of its decision not to intervene, and stated that the State of Illinois, by its Attorney General, concurred in the decision not to intervene. That same day, the Court ordered that the complaint be unsealed and served upon Omnicare. Relator requested that Omnicare waive service of a summons, which Omnicare agreed to do, and Omnicare subsequently moved to dismiss the complaint in its entirety.

B. Factual Background

Since 1997, Litwiller has been employed by Omnicare. Omnicare is an institutional pharmacy and one of the nation's largest providers of pharmaceutical products and services to nursing facilities, long-term care facilities, assisted living communities, and other chronic care settings ("the facilities"). Payments for Ominicare's pharmaceutical products and services come in large part through Medicare and Medicaid.

Litwiller alleges that during the period of at least January 2009 through the present, Omnicare has engaged in a series of schemes to offer and pay illegal inducements (including credits, rebates, payments, free services and discounted products and services) to induce facilities to purchase or continue purchasing products and services reimbursed through Medicare and Medicaid. In seeking reimbursement from Medicaid, Omnicare was required to and did certify that it complied with all anti-kickback statutes on each claim submitted. According to Litwiller, each certification was false and thus each claim submitted to Medicaid was false, because Omnicare in fact was in violation of federal and state anti-kickback statutes at the time of each relevant claim. As a result, Litwiller alleges that Omnicare received millions of dollars in payments from federal and state funds to which it was not entitled. The complaint alleges that Omnicare developed and implemented the following specific schemes.

1. "Forgiveness of Accounts Receivable"

Litwiller alleges that as early as January 2009, Omnicare-at the direction of its Regional Vice President of Pharmacy Services for the Illinois Region, A. Samuel Enloe ("Enloe")- engaged in a pattern and practice of agreeing to forego payment of bills for many of its customers, in exchange for and as an inducement for the facilities to continue purchasing purchase lucrative prescription medications from Omnicare. As a result, Omnicare permitted many nursing facilities with which it does business in Illinois to amass substantial accounts receivables, often comprised in large part or entirely of charges for pharmaceutical services and non-prescription products. Relator does not identify the customers by name or allege that the accounts were not eventually collected.

2. "Improper Discounts for Pharmaceutical Services"

In October 2009, pursuant to a consent decree with the U.S. Department of Justice, Omnicare entered into an Amended and Restated Corporate Integrity Agreement ("CIA") with the Department of Justice. Pursuant to the CIA, a policy was allegedly implemented whereby Omnicare would charge a fee for pharmaceutical services that reflected the real value of those services. Relator alleges that rather than implement this policy with regard to favored customers in Illinois, Enloe agreed to provide improper discounts for those services, as an inducement to keep key customers. Relator does not identify the customers by name or any specific claims that were affected.

3. "Improper Refunds and Credits'"

Litwiller alleges that Omnicare learned that certain facilities were threatening to terminate their relationships with Omnicare, or were being solicited by competitors. In response, Omnicare allegedly contacted those customers and claimed it had conducted a review of its prior billing records, determined it had overcharged the clients by various amounts (ranging from $60, 000 to $300, 000), and offered the customers a "credit" of those amounts. Relator alleges that there was no legitimate accounting basis for these "credits." Relator does not identify the customers by name or any specific claims that were affected.

4. "Discounts and Subsidies for Third Party Services"

In or around March 2009, Omnicare entered into a financial arrangement with SigmaCare, an electronic medical records management company, in which Omnicare would sell SigmaCare services and programs to facilities. For at least the period of October 2009 through December 2011, Relator alleges that Patrice Johnson, an Omnicare employee, promoted and sold SigmaCare products and services to nursing facilities throughout Illinois. Relator alleges that on numerous occasions, Onmincare offered SigmaCare at a substantial discount from regular prices to any facility that agreed enter into a fixed, multi-year agreement with Omnicare for the provision of pharmaceutical products and services. This resulted in Omnicare either receiving a lower commission from SigmaCare, or Omnicare directly paying some of the cost for the SigmaCare services and programs. According to the complaint, Omnicare offered ...


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