Nov. 3, 2009 (PR Newswire) --
BOSTON, Nov. 3 /PRNewswire/ -- Omnicare Inc., the nation's largest pharmacy for nursing homes, will pay the federal government and several states $98 million to settle Medicare and Medicaid fraud charges -- partially due to a businessman whose gambling habit nearly destroyed his life.
Adam Resnick, a Chicago-based healthcare entrepreneur, exposed through a "qui tam" (whistleblower) lawsuit a kickback deal between Omnicare and the owners of a nursing home chain. As part of today's settlement, Omnicare will pay $19.8 million to the government to resolve Resnick's qui tam case.
National Senior Care Inc. and prominent New York real estate investor Rubin Schron - who together purchased the Mariner Health Care Inc. nursing home chain. - as well as Leonard Grunstein, a New York real estate lawyer who was Schron's agent in the deal, remain defendants in the case and also are liable for many millions of dollars in damages.
Resnick will use a substantial amount of his reward money, as provided to whistleblowers under the False Claims Act, to pay restitution to the U.S. government for an unrelated matter -- his role in the collapse of a Chicago bank in 2002 due to his pathological gambling addiction. He served time in prison.
.
"Adam Resnick is continuing to repay his debt to American taxpayers," said Mary Louise Cohen, a Washington, DC, attorney with Phillips & Cohen LLP, which represents the whistleblower. "By bringing this wrongdoing to the attention of federal prosecutors, he has helped the government recover twice the amount the government lost due to the bank failure."
Resnick's qui tam lawsuit, which the government joined, alleged that Omnicare paid a $50 million kickback to Mariner Health Care disguised as a purchase of a small business unit of Mariner.
On the same day that Omnicare paid Mariner $50 million for a business unit that had only $2 million to $3 million in assets, Mariner signed a 15-year contract with Omnicare to refer all of its nursing home patients to Omnicare for the patients' drug purchases, including drug purchases covered by Medicare and Medicaid.
"This was a sophisticated kickback scheme," said Tim McCormack, another Phillips & Cohen lawyer in Washington. "The companies tried to mask the payment through the use of numerous shell companies and complicated ownership structures."
The government alleges in its complaint that Mr. Schron, with the help of Mr. Grunstein and other associates, fabricated and backdated documents to hide the fraudulent nature of the transaction after they learned the government was investigating their deal with Omnicare.
"In all likelihood, the government never would have uncovered this scheme without the assistance and persistence of Mr. Resnick," McCormack said.
