United States Files Lawsuit Against PharMerica Corporation For Violations Of The False Claims Act And The Controlled Substances Act

WASHINGTON - The United States has filed suit against PharMerica Corp. in the U.S. District Court for the Eastern District of Wisconsin, the Justice Department announced today.  The lawsuit alleges that PharMerica violated the False Claims Act and the Controlled Substances Act by dispensing controlled drugs without valid prescriptions and causing claims for illegally dispensed drugs to be submitted to the Medicare program.

PharMerica is a long-term care pharmacy that dispenses drugs to residents of long-term care facilities, including nursing homes and skilled nursing facilities. PharMerica services approximately 300,000 residents of long-term care facilities and fills approximately 40 million prescriptions annually.  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.

“Pharmacies are prohibited by law from dispensing Schedule II narcotics, which have the highest potential for abuse of any prescription drug, without a valid prescription from a physician,” said Stuart Delery, Assistant Attorney General for the Civil Division of the Department of Justice.  “As we have done today, the Department of Justice will take action to protect the integrity of Federal health care program funds and hold those who violate the law accountable.”

The government’s complaint alleges that PharMerica routinely dispensed Schedule II controlled drugs in non-emergency situations without first obtaining a written prescription from a treating physician.  According to the complaint, PharMerica’s actions violated both the spirit and the letter of the Controlled Substances Act by enabling nursing home staff to order narcotics, and pharmacists to dispense narcotics, before confirming that a physician had made a medical judgment about whether these narcotics were necessary and should be used by the resident.  The complaint alleges that PharMerica knowingly caused the submission of false claims to Medicare for these improperly dispensed Schedule II drugs, in violation of the False Claims Act.

The lawsuit was initiated by former PharMerica employee Jennifer Denk who filed a complaint against PharMerica in July 2009.  The complaint was filed under the qui tam provisions of the False Claims Act, which permit parties, known as “relators,” to sue on behalf of the United States when they believe that defendants submitted false claims for government funds.  Under the False Claims Act, the government may intervene in the suit and recover three times its damages plus civil penalties.  Denk’s complaint was later consolidated with a subsequent complaint filed in May 2010 by Eric Beeders and Lesa Martino.

“The complaint that we are filing today reflects the abiding commitment of the Justice Department to the qui tam process, encouraging people with information about alleged fraud and abuse to report it in a timely and effective manner,” said James L. Santelle, U.S. Attorney for the Eastern District of Wisconsin.  “The False Claims Act allegations in this case, which involve Medicare billings for the dispensing of Schedule II controlled substances absent valid prescriptions, are precisely the type of allegations that our office and the Civil Division examine carefully, investigate fully, and prosecute vigorously-to protect taxpayer monies and to promote the delivery of professional health care to all of our constituents.”

The investigation was conducted by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Eastern District of Wisconsin, the Drug Enforcement (DEA), and the Office of Inspector General of the Department of Health and Human Services. 

“When the most restrictive class of pharmaceutical controlled substances are dispensed by a pharmacy it is crucial to patient safety, as well as mandatory by federal law, to ensure that the patient's physician prescribed and intended for the drug to be administered. As alleged in this complaint, PharMerica did not perform that standard of patient care by failing to obtain a valid prescription prior to dispensing and is now being held accountable,” stated Jack Riley, Special Agent in Charge of the DEA’s Chicago Field Division.

The government’s involvement in this case is part of the United States’ emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in 2009.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $14.8 billion through False Claims Act cases, with more than $10.8 billion of that amount recovered in cases involving fraud against federal health care programs.

The lawsuit is captioned U.S. ex rel. Denk v. PharMerica Corporation, Case No. 09-cv-720.  The claims asserted in the complaint against PharMerica are allegations only, and there has been no determination of liability.

Parents and children are encouraged to educate themselves about the dangers of drugs by visiting DEA’s interactive websites at www.JustThinkTwice.com, www.GetSmartAboutDrugs.com and www.dea.gov.