An Ohio-based company will pay $8 million in a settlement with the United States on claims that it paid a Kansas City-area pharmacy to buy prescription drugs, the U.S. Department of Justice said in a press release.U.S. ex rel. Saleaumua v. Cardinal Health Inc., 4:08-cv-848.
According to the Justice Department, the suit against Cardinal Health Inc. was brought by former Kansas City Chiefs football player and pharmacy owner R. Daniel Saleaumua and pharmacy consultant Kevin Rinne under the whistle-blower, or qui tam, provisions of the False Claims Act.
Saleaumua, who played for the Chiefs from 1989 to 1996, later started a company that owned seven Medicine Shoppe pharmacies in the Kansas City area. In a lawsuit filed under seal in 2008, Saleaumua alleged that Cardinal paid him $440,000 in exchange for an agreement that he purchase from Cardinal prescription drugs for his pharmacies.
According to the lawsuit, the payment included $300,000 in cash plus a $140,000 credit towards the purchase of an inventory tracking system run by Cardinal.
“American taxpayers are the victims of illegal kickback schemes that result in Medicare and Medicaid paying millions of dollars more than they should for prescription drugs,” Beth Phillips, U.S. Attorney for the Western District of Missouri, said in a press release. “Today’s $8 million settlement underscores our commitment to combating health care fraud and protecting taxpayers.”
Cardinal Health, based in Dublin, Ohio, did not admit fault in the settlement. In an interview, Corey Kerr, a company spokeswoman, said the company’s “up-front discount” did not result in the government’s paying higher prices for drugs and was not a “kickback.”
“We strongly believe that we acted appropriately and complied with applicable laws and regulations,” she said. “We actually believe we would have prevailed in litigation. We settled for the purpose of avoiding the time and expense affiliated with protracted litigation.”
The plaintiffs were represented by attorneys with Graves Bartle Marcus & Garrett in Kansas City. Todd Graves is a former U.S. attorney in Kansas City, Nathan Garrett was a special assistant U.S. attorney in Dallas, and David Marcus has handled similar qui tam cases before. That experience helped them identify a none-too-obvious cause of action.
“It doesn’t intuitively strike you as an issue,” Marcus said in an interview. “If a client comes to you and says ‘I just got paid a lot of money,’ you don’t automatically think, ‘Well, gosh, there’s some wrongdoing there.”
Under the False Claims Act, private citizens can sue on behalf of the United States and share in any recovery. Saleaumua and Rinne will receive $760,000, the press release said. Marcus said he didn’t know how that would be apportioned between them.
In their petition, the plaintiffs said they weren’t aware the payments were unlawful.
Under federal qui tam provisions, the private plaintiff must bring the information to the government, which ultimately decides whether to pursue claims or not.
The Justice Department said it has recovered more than $7.1 billion in False Claims Act cases since January 2009.
The case is