PharMerica to Pay $23.5 Million to Settle False Claims Act Lawsuit

Written May 18, 2015 by Robert Lu

On Thursday, May 14, 2015, the U.S. Justice Department announced that PharMerica Corporation has agreed to pay the United States $23.5 million to resolve a lawsuit alleging that it violated the False Claims Act by submitting false claims to Medicare for Schedule II controlled substances without first obtaining the necessary physician prescription showing a medical need.   A separate part of the lawsuit, and settlement, resolved allegations that PharMerica violated the Controlled Substances Act. That portion of the lawsuit was resolved for $8 million.

PharMerica is a long-term care pharmacy that dispenses medications to residents of long-term care facilities, including nursing homes and skilled nursing facilities. Many of the prescriptions filled by PharMerica are for controlled substances listed in Schedule II under the Controlled Substances Act. Schedule II drugs, such as oxycodone and fentanyl, can cause significant harm if used improperly and have a high potential for abuse. The lawsuit alleged that that PharMerica submitted false claims to Medicare for drugs dispensed without valid prescriptions in violation of the Controlled Substances Act.

The case was originally filed by a qui tam plaintiff (or relator), Jenny Buth, a pharmacist formerly employed by PharMerica as its pharmacy operations manager in Pewaukee, Wisconsin. Under the False Claims Act, the government may recover up to three times the amount of money it lost as a result of the defendant’s fraud, as well as additional penalties. A whistleblower, or a “relator” under the False Claims Act, is entitled to a reward of 15% to 30% of what the government recovers. Since 1986, False Claims Act qui tam relators were awarded more than $2 billion.

The lawsuit is captioned U.S. ex rel. Denk v. PharMerica Corp., No. 09-cv-720 (E.D. Wis.). The claims resolved by the settlement are allegations only; there has been no determination of liability.

For additional information about the False Claims Act, the resources and services offered by Robbins Geller Rudman & Dowd LLP for whistleblowers, please visit the Firm’s Whistleblower page.