PharMerica Will Pay $31.5 Million to Settle Qui Tam Suit

The Department of Justice announced that PharMerica Corporation, headquartered in Louisville, Kentucky, will pay $31.5 million to settle allegations in a qui tam suit that PharMerica violated the Controlled Substances Act and the False Claims Act.

PharMerica is a long-term care pharmacy that dispenses prescription medications to residents of nursing homes and skilled nursing facilities. According to its website, PharMerica serves over 300,000 patients in 45 states and fills approximately 40 million prescriptions per year. It employs roughly 6,000 employees across the country.

In 2009, a former PharMerica employee, Jennifer Bluth f/k/a Jennifer Denk, filed a whistleblower complaint under the qui tam provisions of the False Claims Act alleging that PharMerica violated the Controlled Substances Act by dispensing Schedule II controlled drugs without a valid prescription. The whistleblower further alleged that all submissions of claims to Medicare for payment of these improperly dispensed mediations were made in violation of the False Claims Act. The whistleblower was previously employed as the Pharmacy Operations Manager in PharMerica’s facility in Pewaukee, Wisconsin.

According to the Drug Enforcement Agency, Schedule II controlled drugs are dangerous drugs with a high potential for abuse and the potential to lead to severe psychological or physical dependence by users. Some examples of Schedule II drugs are Vicodin, cocaine, fentanyl, methamphetamine, morphine, methadone, Demerol, oxycodone, Adderall, and Ritalin.

The government intervened in the whistleblower’s complaint and filed its own complaint in 2013. In its complaint, the government alleged that between January 2007 and December 2009, PharMerica derived approximately 45% of its revenue from prescription medications billed to Medicare Part D, many of which were for Schedule II drugs. According to the government’s complaint, during this period, PharMerica dispensed prescriptions for controlled substances based on requests from the long-term care facility, rather than upon a valid prescription from a medical practitioner as required by the Controlled Substances Act. The complaint alleges that PharMerica filled prescriptions based solely on order forms it received from staff at long-term care facilities; based on a resident’s previous hospital discharge order provided by the long-term care facility staff; or after receiving replenishment stickers that PharMerica had previously provided to the long-term care facility.

According to the Justice Department, PharMerica will pay $8 million to resolve the allegations that it violated the Controlled Substances Act and $23.5 million to resolve the False Claims Act allegations. The whistleblower will receive approximately $4.3 million of the proceeds as her reward under the qui tam provisions of the False Claims Act.