LANSING, Mich., Oct. 5 /PRNewswire/ -- Attorney General Mike Cox today announced that he has reached a $52.5 million settlement in a civil suit filed against Specialized Pharmacy Services and its parent corporation, Omnicare, Inc. The settlement is the largest Medicaid fraud recovery in the State’s history. In August of this year the Attorney General also filed criminal charges against the President of Specialized Pharmacy Services, Daniel Lohmeier.
Stated Cox, “The record amount of this settlement demonstrates the commitment of my office to fight Medicaid fraud. The abuse of public funds intended to help the most vulnerable members of society will not be tolerated.” Added Cox, “This settlement represents a massive recovery of funds for the hardworking taxpayers of Michigan.”
The settlement and the previous criminal charges filed against Daniel Lohmeier are the result of an extensive investigation conducted by the Attorney General’s Health Care Fraud Division, with assistance from the Michigan Department of Community Health, the U.S. Department of Health & Human Services’ Office of the Inspector General, and the FBI.
Department of Community Health Director Janet Olszewski stated, “This landmark settlement would not have been possible without the tireless efforts of the Department of Community Health’s auditors who discovered these illegal schemes. Thanks to our work with the Attorney General’s Health Care Fraud Division, not only is Specialized forced to pay back what they stole, they will also pay the taxpayers of the state of Michigan over $30 million in penalties.”
The investigation of Specialized Pharmacy Services, the largest Michigan pharmacy supplying medication to long-term care facilities, focused on:
- The company’s improper billing for medication that it dispensed in unit doses; - The company’s failure to credit Medicaid for drugs that were not consumed by Medicaid beneficiaries; - The improper billing of Medicaid for drugs related to the terminal illnesses of Medicaid beneficiaries who were in hospice, and; - The billing of Medicaid for medication dispensed to beneficiaries who were deceased.
Results of the investigation revealed that from 1999 through 2005, Specialized defrauded the Michigan Medicaid Program by as much as $17,000,000.00.
Specialized owns pharmacies located in Livonia, Grand Rapids and West Branch and is a subsidiary of Omnicare, Inc., the nation’s largest supplier of pharmaceuticals to long-term care facilities.
Today’s settlement dictates that Specialized will execute both a Corporate Integrity Agreement and a Settlement Agreement to insure that future billings are in accordance with the law. The highlights of the agreement include:
Payment of $52.5 Million to the State of Michigan
Omnicare has agreed to pay to the State and the Medicaid program $52.5 million. Of that total, $43 million will be paid by October 10, 2006, and $6 million will be paid in installments of $2 million over the next three years. The parties have also reached agreement on $3.5 million related to hospice claims which will be the subject of a separate agreement:
- $17 million in Medicaid reimbursement monies ($17,066,667.00) and double that amount, or $34 million ($34,133,333.00) (200%), in satisfaction of penalty claims; - $1 million of the settlement will be directed toward public service announcements regarding drug pricing, and; - $300,000 of the settlement will be used to reimburse this office for the costs of the multi-year investigation. Corporate Integrity Agreement
A Corporate Integrity Agreement will be in place for two years and is designed to improve Specialized’s Medicaid billing practices and to demonstrate the company’s commitment to comply with Medicaid pharmacy policy and procedure. The Corporate Integrity Agreement will require Specialized Pharmacy to:
- Hire a compliance officer; - Provide new training of employees and implement changes in billing procedures, and; - Pay liquidated damages if the Corporate Integrity Agreement is violated; in other words, a penalty system is built in to provide for compliance. Settlement Agreement
To resolve the civil action, a settlement agreement has been entered in the Ingham County Circuit Court, under the jurisdiction of Judge William E. Collette. Under the settlement agreement the Court will retain jurisdiction over the case to enforce the requirements of the Corporate Integrity Agreement and resolve disputes between the parties.
To date, Attorney General Mike Cox’s Health Care Fraud Division is responsible for collecting more than $28.5 million in penalties and restitution. That figure will rise to over $80 million once payment from Omnicare is received. The Health Care Fraud Division, which was established in 1978, had collected a total of $20 million before Cox became Attorney General in 2003.
Concluded Cox, “Companies and individuals who refuse to abide by the law will be vigorously pursued. Today’s action represents my commitment to the citizens of Michigan to continue to combat fraud and protect the public.”
Michigan Attorney General
CONTACT: Rusty Hills or Ari Faneuil of Michigan Attorney General’s Office,+1-517-373-8060
Web site: http://www.michigan.gov/ag//
