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Case 1: 06 - - 10149-RGS Document33 Filed 03/04/09 Page 1 of32
FILEDIN CLERKS OFFICE
UNITED STATESDISTRICTCOURT
DISTRICTOFMASSACHUSETTS2009 MAR - :
)UNITED STATES OF AMERICA , et al. , ex rel.
ADAM B.RESNICK ,
Plaintiffs
Civil Action . No.06-10149 -RGS
OMNICARE, INC ., RUBIN SCHRON,
LEONARD GRUNSTEIN , MURRAY FORMAN , )MARINER HEALTH CARE, INC. , andSAVASENIORCARE ADMINISTRATIVE
SERVICES, LLC
)
)FILED UNDER SEAL
Defendants.
COMPLAINT OF THE UNITED STATES
This is an action to recover treble damages, restitution , and civil penalties under the False
ClaimsAct, 31U.S.C.S 3729-33, and thecommon law for the submission of falseclaimsto
federal health care programs as a result of a kickback that defendant Omnicare , Inc.
("Omnicare" ) offered and paid , and that the remaining defendants , Rubin Schron, Leonard
Grunstein, Murray Forman , Mariner Health Care, Inc.( Mariner ) , and SavaSeniorCare
Administrative Services LLC ( , solicited and / or received , in violation of the federal anti
kickback statute, 42 U.S.C. 1320a- 7b(b).
Introduction
Omnicare is a large nursinghome pharmacy, and Mariner and Sava operate nursing
homes. OmnicarepaidMariner and Sava $ 50 million to induce them to sign long- term
pharmacy contracts pursuant to which they steered theirnursing homepatients, including
Medicare andMedicaid patients, to Omnicare for pharmacy dispensing services. The
Case 1:06 - - 10149-RGS Document 33 Filed 03/04/09 Page 2 of 32
defendants, including individual defendants Schron , Grunstein , and Forman , conspired with
Omnicare to disguise the $ 50 million kickback as payment for a Mariner business unit called
MarinerMedicalSupply ( . thetimeofOmnicare'sagreementto pay the $50 million,
MMS had only two employees and no tangible assets apart from accounts receivable valued at
less than $ 3 million.
Jurisdiction and Venue
1 . This Court has subjectmatter jurisdiction under 28 U.S.C. 1345. The Court has
supplemental jurisdiction to entertain the common - law causesof action under 28 U.S.C.
$ 1367 a )
2 . The Courtmay exercise personaljurisdiction over the defendants,
and venue is appropriate in this Court, under 31U.S.C. 3732( a ), because atleast three of the
defendants Omnicare , Mariner, and Sava transact or transacted business in this District, and
because allof the defendants submitted caused to be submitted , or conspired to submit false
claimsin this District.
The Parties
3 . PlaintiffUnited States, acting through the DepartmentofHealth and Human
Services (“HHS” ), administers the Health Insurance Program for the Aged and Disabled
established by Title XVIIIofthe Social Security Act, 42 U.S.C. 1395, et seq. (Medicare), and
Grants to States for MedicalAssistanceProgramspursuantto TitleXIX of theSocialSecurity
Act, 42 U.S.C. 1396 et seq. (Medicaid).
4 Relator Adam Resnick is a resident of Illinois
2
Case 1:06 - - 10149-RGS Document 33 Filed 03/04/09 Page 3 of 32
5 . Defendant Omnicare is a Delaware corporation with headquarters in Covington,
Kentucky . Omnicare isthe nation's largest provider of pharmacy services to nursing homes and
other long- term care facilities. Through contracts with these facilities, itdispenses drugs to
approximately 1.4 million long- term care residents in 47 states, including Massachusetts.
6 . Defendant Rubin Schron is a residentofNew York . At all relevant times,
defendantSchron directly or indirectly controlled defendants Sava and Mariner.
7 . DefendantMurray Forman is a residentofNew York. Heis the employeeof
MetCap Securities , LLC (“MetCap ) , an investment bank. At all relevant times, defendant
Formanacted as defendantSchron's agentin connectionwith the conduct allegedherein.
8 . DefendantLeonardGrunstein is a residentofNew Jersey. Heis the principal
owner ofMetCap. Heis also a lawyer. At all relevant times, defendantGrunstein acted as
defendantSchron'sagent in connection with theconductalleged herein.
9 . Defendant Mariner is a Delaware corporation with headquarters in Atlanta ,
Georgia. Priorto beingacquired on December 10, 2004,Mariner was a public company and one
of the nation's largest nursing homechains, operating approximately 252 nursing homes
representing approximately 32,000 nursinghome beds. After being acquired on December 10 ,
2004, privately-heldMariner continued to operate numerousnursing homes, including atleast
two nursing homes in Massachusetts.
10 . DefendantSava isa privately-held Delawarelimited liability companywith
headquartersin Atlanta, Georgia. Sava operatesnumerousnursinghomes, includingat leasttwo
nursinghomes in Massachusetts.
3
Case 1:06 - - 10149-RGS Document 33 Filed 03/04/09 Page 4 of 32
LegalBackground
The Anti-Kickback Statute
11. The federal anti-kickback statute , 42 U.S.C. 1320a - ) ( AKS” ), arose out of
congressional concern that remuneration and gifts given to those who can influence healthcare
decisionswould result in goodsand servicesbeingprovided that aremedically unnecessary ,of
poor quality, or evenharmfulto a vulnerable patientpopulation. Toprotectthe integrityofthe
Medicare andMedicaid programs from these harms, Congress enacted a prohibition againstthe
payment ofkickbacks in any form . First enacted in 1972, Congress strengthened the AKS in
1977and 1987 to ensurethatkickbacksmasqueradingas legitimatetransactionsdid notevadeits
reach . See Social Security Amendments of 1972 , Pub L.No. 92-603, 242 b ) and (c) ; 42
U.S.C. 1320a- 7b,Medicare-Medicaid Antifraud and Abuse Amendments, Pub. L.No.95-142;
Medicare andMedicaid Patient and Program Protection Actof1987 Pub. L.No. 100-93.
12. TheAKS prohibits any person or entity from offering,making, soliciting, or
accepting remuneration , in cash or in kind directly or indirectly, to induce or reward any person
forpurchasing, ordering, or recommending or arranging for the purchasing ororderingof
federally- fundedmedicalgoodsor services:
(b ) Illegalremunerations
(1) whoeverknowingly and willfully solicitsorreceives any remuneration ( includingany kickback, bribe, or rebate) directly or indirectly, overtly orcovertly, in cash or inkind-
( A ) in return for referringan individual to a person for the furnishingorarranging forthe furnishingofany item or service for which paymentmay be made in whole or inpartunder a Federalhealth care program , or(B ) in return for purchasing, leasing, ordering, or arranging for or recommendingpurchasing, leasing, or orderingany good, facility, service, or item forwhich paymentmay bemade in whole or in part under a Federalhealth care program , shallbe guilty
Case 1:06 - - 10149-RGS Document 33 Filed 03/04/09 Page 5 of 32
ofa felony and upon conviction thereof, shall be fined notmore than $25,000 orimprisoned fornotmore than five years, orboth .
( ) whoever knowingly and willfully offers or pays any remuneration ( including anykickback, bribe, or rebate ) directly or indirectly, overtly or covertly , in cash or in kindto any person to induce such person-( A ) to refer an individual to a person for the furnishing or arranging for the furnishingof any item or service for which paymentmay be made in whole or in part under aFederal health care program , or(B ) to purchase, lease, order, or arrange for or recommend purchasing, leasing, orordering any good, facility , service , or item forwhich paymentmay be made in wholeor in part under a Federal health care program , shall be guilty of a felony and uponconviction thereof, shall be fined notmore than $ 25,000 or imprisoned for notmorethan five years, or both.
42 U.S.C. 1320a- ) (1) , (2 ). Violation of the AKS also can subject the perpetrator to
exclusion from participation in federalhealth care programsand effective August 6 , 1997, civil
monetary penaltiesof $ 50,000 per violation and three times the amountofremuneration paid. 42
U.S.C.$ 1320a-7 (b ) (7) and 42 U.S.C. 1320a-7a a ) (7) .
13 TheOffice of the InspectorGeneralofHHS(“ HHS- OIG ) hasadvisedthat, if the
purchase price for a business acquisition is in reality a fee to induce therecipientof the payment
to refer business reimbursed by Medicare or other federal programs, the payment of the
remuneration violates the AKS. When determining the true intentof such a payment, one
relevant factor iswhether the amountpaid reflects the fairmarket valueofthe acquired business.
When determiningthe market valueof goodwill and other intangibleassetsofa healthcare
entity that refers business reimbursed by Medicare or other federalprograms traditionalmethods
of valuation not comport with the prescriptionsofthe anti -kickback statute. ” For example , a
paymentmade for a referral stream isnot reflective of fair market value if the referrals are for
businessreimbursedby federalprograms. See Letter from D.McCarthy Thornton, HHS-OIG , to
T.J.Sullivan, IRS, Dec.22, 1992, available at
5
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http://oig.hhs.gov/fraud/docs/safeharborregulations/acquisition122292.htm . See also HHS- OIG
SpecialFraud Alert, Dec. 19, 1994 (advising that, in the context of a transaction involving
entities that receive reimbursementfrom federal health care programs, market value
reflect an arm's length transaction which has notbeen adjusted to include the additionalvalue
which oneorboth of thepartieshas attributed to thereferralofbusinessbetween them .
B. The False ClaimsAct
14. The False ClaimsAct provides, in pertinentpart, that
( a) Any person who ( 1) knowingly presents, or causes to bepresented ,to an officer or employee of the United States Government or amember of the Armed Forces of the United States a false or
fraudulent claim for payment or approval; ( 2 ) knowingly makes,uses, or causes to bemade or used, a false record or statement to
get a false or fraudulent claim paid or approved by the
Government; (3 ) conspires to defraud the Government by getting afalse or fraudulent claim allowed or paid; ...or 7 ) knowinglymakes, uses, or causes to be made or used, a false record or
statement to conceal, avoid, or decrease an obligation to pay or
transmitmoney or property to the Government
is liable to the United StatesGovernmentfor a civilpenalty ofnotless than $ 5,000 andnotmore than $ 10,000, plus 3 times theamountofdamageswhich theGovernmentsustains becauseof theact ofthat person.
(b ) Forpurposesof this section, the terms“ knowing and
“ knowingly mean that a person, with respect to information - 1)has actual knowledge of the information; ( 2) acts in deliberateignorance of the truth or falsity of the information; or ( 3) acts inreckless disregard of the truth or falsity of the information,
andnoproofof specific intent to defraud is required.
31U.S.C. 3729(a ), (b ).
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15 . Pursuant to the Federal CivilPenalties Inflation Adjustment Act of 1990, as
amended by the DebtCollection ImprovementAct of 1996 , 28 U.S.C. 2461(notes), and64
Fed. Reg. 47099,47103 ( 1999), the False ClaimsAct civil penalties were adjusted to $ 5,500 to
$11,000 for violations occurring on orafter September 29, 1999.
TheRelationshipBetweenOmnicare'sPharmacy BusinessAndMedicaid And Medicare
16 Omnicare's principal business is to fill prescriptions and to deliver drugs to
patients in long-term care facilities , including Mariner and Sava nursing homes. When
Omnicaredeliversdrugs to patients in Marinerand Sava nursinghomes, itsubmits
reimbursementclaims on behalf of those patients to their insurers, includingMedicaid and, since
January 1, 2006 , prescription drug sponsors actingon behalf ofMedicare Part D ( Part
sponsors ).
Medicaid
17. Medicaid is a joint federal-state program thatprovideshealth care benefits for
certain groups, primarily the poor and disabled. The federal portion of each state's Medicaid
payments, knownas theFederalMedicalAssistancePercentage(“ FMAP ) is based on the
state's per capita incomecompared to the national average. 42 U.S.C. ) Amongthe
states, the FMAPis at least 50 percent and ashigh as 83 percent.
18. TheMedicaid programsof all states reimburse for prescription drugs. The vast
majority of states award contracts to private companies to evaluate and to process claims for
paymenton behalfofMedicaid recipients. Typically, after processing the claims, these private
companies then generate funding requests to the state Medicaid programs, which in turn obtain
federal fundsfrom the United States.
7
Case 1:06 - - 10149-RGS Document 33 Filed 03/04/09 Page 8 of 32
19 Omnicare is a party to provider agreements with each of the state Medicaid
programsto which it submitsdrugreimbursementclaims. In Massachusetts, forexample,
Omnicare has a provider agreement with MassHealth Massachusetts regulations provide that
“ All pharmacies participating in MassHealth must comply with the regulations governing
MassHealth, includingbutnotlimited to MassHealth regulations set forth in 130 CMR 406.000
and 450.000. ” TheMassachusettsregulationat 130 CMR 450.261in turn provides: All
membersand providersmustcomplywith all federaland state laws and regulationsprohibiting
fraudulentacts and false reporting, specifically including but not limited to 42 U.S.C. 1320a- 7b
[the federal anti-kickback statute] .”
Medicare
20 Medicare is a federally funded and administered health insurance program for
certain groups, primarily elderly and disabled persons. HHS administers theMedicareprogram
through the Centers forMedicare & MedicaidServices( ) .
21. Medicare Part D , a voluntary prescriptiondrug benefit program forMedicare
enrollees , became effective January 1, 2006 .
22. Medicare Part D coverage is offered through private companies, known as Part D
sponsors, that contract with CMSto administer prescription drugplans. CMS gives each Part D
sponsor advance monthly payments consisting ofthe Part D sponsorplan's direct subsidy per
enrollee (which is based on a standardized bidmade by the Part D sponsor), estimated
reinsurance subsidies for catastrophic coverage, and estimated low - income subsidies. 42 C.F.R.
423.315 , 423.329. Throughoutthe paymentyear, each timea Medicare beneficiary gets a
prescription filled under Part D the sponsornotifies CMS of the event , including the cost ithas
8
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incurred. At the endofthe payment year, CMSreconciles the advance payments paid to each
Part D sponsor with the actual costs the sponsorhas incurred. If CMS underpaid the sponsor for
low-incomesubsidiesor reinsurancecosts, it willmakeup thedifference. IfCMSoverpaid the
sponsor for low - incomesubsidies or reinsurancecosts, itwillrecoupthe overpaymentfrom the
sponsor. After CMS reconciles a plan's low - income subsidy and reinsurance costs , it then
determines risk-sharing amounts owed by the plan to CMSor by CMSto the plan related to the
directsubsidy bid. Risk - sharing amounts involve calculations based on whether and to
whatdegree a plan'sallowablecosts per beneficiary exceeded or fellbelow a target amountfor
the plan by certain threshold percentages. 42 C.F.R. 423.336 .
23. Part D sponsors enter into subcontracts with many pharmacies to provide drugsto
theMedicarePart D beneficiaries enrolled in their plans. These includesubcontracts with long
term care pharmacies , such as Omnicare.
24 When a long-term care pharmacy dispenses drugs to a Medicare beneficiary, it
submits a claim electronically to the beneficiary'sPart D sponsor and receives reimbursement
from the sponsor for the portionofthedrug costnotpaidby the beneficiary. The Part D sponsor
thennotifiesCMSofthe drug dispensingevent includingthe amount it has paid to the
pharmacy. CMSuses that information at the end of the paymentyear when it reconciles its
advance payments to the sponsor with the costs that sponsorhas incurred throughout the year.
25. Part D sponsorsmust certify in their contracts with CMSthat they agree to
comply with allfederal lawsand regulationsdesigned to preventfraud, waste, and abuse,
including , butnot limited to, the anti-kickback statute . 42 C.F.R. 423.505 h ( 1).
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Case 1 :06 - - 10149-RGS Document 33 Filed 03/04/09 Page 10 of 32
26 . CMSregulations require that allsubcontracts between Part D sponsors and
pharmacies contain languageobligating the pharmacy to comply with all applicable federallaws,
regulations, and CMS instructions. 42 C.F.R. 423.505( i ) ( ) ( iv) . Omnicarehas enteredinto
subcontractswith the vast majority ofMedicare PartD sponsors.
In 2003, Prior To The2004 Kickback ,
Omnicare And MarinerNegotiated A Five- Year Pharmacy Contract
27. In approximately early 2003, Mariner issued a request for proposals to suppliers
of pharmacy services. Severallargepharmaciessubmitted proposals. As one of the largest
nursing homepharmacy customers in the country , Mariner had considerable leverage in
resulting negotiations. Ultimately, Marinerselected Omnicare. To secure the Mariner business,
Omnicare agreed that the parties' pharmacy contractwould include a formulary savings
guarantee ” provision pursuant to which Omnicare committed that its drug -switching programs
would saveMarinerat least$ 2.5millionperyear, orOmnicare wouldpayMarinerthe
difference . The Omnicare-Mariner contract ( the “ 2003 Pharmacy Contract effective April
1, 2003, and had a five-year and four-month term .
28. After the signingofthe 2003 Pharmacy Contract,MarinerbecameOmnicare's
largestcustomerin termsofbeds served. In 2004, the 2003 PharmacyContractwith Mariner
generated approximately $ 155 million in revenues and $26million in profits for Omnicare.
The Backdrop To TheKickback: RaisingCash ForThe PurchaseOfMariner
29. On June 29, 2004, Mariner announced it wasbeingsold for approximately $ 1
billion to a new entity , NationalSenior Care , Inc., which was backedby defendant Schron.
Defendants Forman and Grunstein had proposed this transaction to defendant Schron. The
10
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acquirers intended to divide Mariner's nursinghomes between post-acquisition Mariner and
newly-createdSava. To finance the transaction, an investmentbank, CreditSuisse, was to
provide a mortgage ofapproximately $800 million, while defendant Schron was responsible for
providingapproximately $ 200 million in equity. NationalSenior Care's acquisition ofMariner
ultimately closed on December 10, 2004.
30. Duringthe period between June29and December10, 2004, defendantsForman
andGrunstein attempted to arrangetheMarinertransaction so that their client, defendantSchron,
would have to contribute as little cash as possible. Defendant Forman , acting as Schron's agent,
suggestedthatoneway to collect cash would be forpost- acquisitionMariner to sell the rightto
providepharmacyservicesto itsnursinghomes, butFormanwas warnedthat selling therightto
providepharmacyservicestoMarinerwould constitutean illegalkickback. Despitethis
warning , defendants Forman and Grunstein pursued a plan to sell the rightto provide pharmacy
services toMariner. Specifically , they planned to sell the right to Omnicare .
31. To accomplish their goal, defendants Forman and Grunstein , acting as agents of
defendantSchron directedMarinerto send Omnicare a noticedated November23, 2004 the
“ Termination Notice ) , stating thatthe 2003 Pharmacy Contractwould be terminated upon the
closing of the Mariner acquisition . At the time, Mariner's senior executives were generally
satisfied with the 2003 Pharmacy Contractwith Omnicare and actually hadno desire to terminate
it. Likewise, neither defendant Forman nor defendant Grunstein ,nor their principal, defendant
Schron , actually had a desire to terminate the 2003 Pharmacy Contract. Rather, defendants
Forman and Grunstein directedMariner to send the TerminationNotice with the hopethat
Omnicare then would bewilling to pay Mariner to withdraw the Termination Notice .
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When Omnicare Asked That The Termination Notice Be Withdrawn,
Defendants Forman AndGrunstein Suggested Omnicare BuyMMS.
32 As a result of theTermination Notice, Omnicare feared losing the Mariner
businessand its associated revenuesand profits. OnDecember 2 , 2004, Omnicare'sChief
ExecutiveOfficer, JoelGemunder, and ChiefFinancialOfficer, David Froesel, metwith
defendantsForman and Grunstein and others. Duringthemeeting, the Omnicareexecutives
expressed their desire thatMarinerwithdraw the TerminationNotice. DefendantsForman and
Grunstein, acting as agents of defendant Schron , then proposed that Omnicare purchase
Mariner'sMMSunit. Atthe time, Marinerwas usingMMS, whichhadonly two employees and
less than $3 million in tangible assets, to arrange for thedelivery of enteral ( i.e. feeding tube)
supplies to Marinernursing home patients and then to billMedicare Part B for those supplies.
33 At the December2 , 2004, meeting, or shortly thereafter, defendantsFormanand
Grunstein explained that there was a " hole in defendant Schron’s financing for theMariner
acquisition , and that cash from Omnicare could fill that hole .
TheDefendantsWereWarned That ConditioningThe WithdrawalOf The TerminationNoticeOnOmnicare'sPurchaseOfMMS
Would ConstituteAn IllegalKickback
34. During the December 2, 2004 meeting, Omnicare's CEO , Gemunder, initiated a
conference callwith Omnicare's regular outside counsel on healthcare regulatory issues
(hereinafter referred to as“ Omnicare'soutsidecounsel ) . Omnicare'soutside counseltold the
participantsatthe meeting that it would beillegal forMariner to condition the withdrawal of its
Termination Notice on an agreement by Omnicare to purchase MMS, because such a condition
12
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would show thatOmnicare'spayment for MMSalso was in exchangeforMariner'sagreementto
continue referringpatients to Omnicare for pharmacy services.
Omnicare's Term Sheet Tying Its Purchase OfMMSToMariner's WithdrawalOf The Termination Notice.
35. OnDecember 4 , 2004, Omnicare circulated a term sheet to defendants Forman
andGrunstein and others. The term sheet provided inter alia, for the withdrawal ofMariner's
Termination Notice, and for Omnicare to buy MMS for $ 50 million , with $40 million to be paid
at the closing of the purchase of [MMS and 10millionto paid six monthslater. The term
sheet further provided that( 1) the existing2003 Pharmacy ContractbetweenMariner and
Omnicare would be amended to ensure that all ofthe then -existing Mariner nursing homes would
remain under thetermsof the 2003 Pharmacy Contract with Omnicareafterthe larger Mariner
transaction closed , even ifsomeof those homeswere sold ; and ( 2 ) thenew Sava entity would
enter into a pharmacy contract with Omnicare on substantially the same terms” as the 2003
Pharmacy Contract tween Omnicare andMariner.
OmnicareAgreed To BuyMMSAtSomePointIn TheFutureFor $50 Million,But To Pay $ 40 Million Of The Purchase Price Immediately .
36 . OnDecember 6 , 2004, Omnicare's attorneys circulated a draftagreement for
Omnicare to purchaseMMS for $40million. The draftagreementprovided that Omnicare
would pay the entire purchase price up front, before the closing of theMMStransaction . The
purpose of Omnicare paying the $ 40 million up front was to enable defendant Schron to fill the
hole in his financing for the larger Mariner transaction .
13
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37 Defendants Forman andGrunstein, acting as agents of defendant Schron , later
increased the price ofMMS to $50 million , with $ 40 million still to be paid up frontbefore the
closingoftheMMStransaction.
When Omnicare's Board Met To Consider The Proposed Acquisition
OfMMS, The Supposedly Unrelated Issue Of The Value OfKeeping Mariner's Pharmacy Business Arose.
38 On the afternoon ofDecember 7 , 2004, Omnicare's board of directors met to
consider the proposed acquisition ofMMS. The internalOmnicarememorandum for the
meetingexplained that: “ Forthetotal anticipated consideration to the seller of$ 50,000,000, plus
estimated transaction-related expensesof $285,000, Omnicarewill receivetangibleassets with
an estimated net book value of $ 2,904,000 consisting of accounts receivable) and create
goodwilland other intangibleassets of $47,381,000.
39. One of Omnicare's investmentbankers in attendance at the Omnicare board
meeting specifically noted the valueof the pharmacy revenues and profits that Omnicare would
lose ifOmnicaredid notpurchaseMMSand theMarineracquirerswentahead with their threat
to terminate the 2003 Pharmacy Contract. The bankerwrote on the boardmeeting
memorandum : “ YEARS LEFTON CURRENT DEAL: $ 155MM /REVS $ 26MM /OP
PROFITS.” Omnicare'sboardpreservedthosepharmacy revenues and profits by voting to
approve the acquisition ofMMSfor $ 50million, with $ million to be paid up frontbeforethe
MMSclosing
Knowing Defendant Schron Wanted Omnicare's $40 Million Up-Front Payment To CloseOn The Larger Mariner Transaction , Omnicare Exercised Its Leverage To Compel The
Schron - Controlled Entities To Sign New 15 -Year Pharmacy Services Contracts.
40 Priorto December 6 , 2004, when Omnicare first offered to pay Schron $
14
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million up front forMMS, Omnicare hadhoped only to keep the 2003 Pharmacy Contract in
place for post-acquisitionMariner and Sava. Lateon December 7 , 2004 however,Omnicare
sentMarinera listofproposed“materialchanges” to the existingOmnicare-Mariner pharmacy
relationship . Omnicare's list proposed that the parties enter into entirely new agreements that
would supersede the existing 2003 Pharmacy Contract ,which stillhad well over three years
remaining on its term . Omnicare proposed that thenew contracts have 15-year terms and omit
the 2003Pharmacy Contract's formulary" savings guarantee” underwhich Omnicare was
obligated to payMarinerup to $ 2.5 million each year.
41. Duringthe following two days, Omnicare, Mariner, and Savanegotiated the
specific terms of new pharmacy contracts . Mariner and Sava, under the direction of defendants
Forman and Grunstein, who in turn were acting as agents ofSchron, agreed to all of the
materialchanges” that Omnicarehad proposed, includingthe15- year termsthatwould run until
2019 and the deletion of any formulary savings guarantees for the nursing homes.
42. Omnicarenegotiated the two transactions-- thenew pharmacy contracts and
agreementto buy MMS atthe same time, andwith the sameparties: defendants Forman and
Grunstein , acting as agents ofdefendant Schron , who controlled defendantsMariner and Sava.
Attorneys Warned The Defendants ThatOmnicare's Purchase OfMMSLookedLikeConsiderationFor TheNew PharmacyContracts.
43. The defendantsunderstoodthat it was illegalfor them to tie the new pharmacy
contractsto Omnicare'sagreementto purchaseMMS, and they recognized that, ifdiscovered,
their arrangementcould expose them to an enforcementaction. Omnicare soughtadvice from
Omnicare's outside counsel on how to minimize the risk of such an action . Among other things ,
Omnicare'soutside counseladvised the partiesto push off the date ofthe closingofOmnicare's
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acquisition ofMMS, so that itwould notoccur near the time of the signing of new pharmacy
contracts .
44. Defendant Grunstein's law firm represented theMariner acquirers in their
negotiationswith Omnicare regarding both thenew 15 - year pharmacy contracts and Omnicare's
purchase ofMMS. On December 8 , 2004,defendantGrunstein's law partnersentan e -mail to
defendants Forman and Grunsteinand to Darren Alch, a health care attorneyatdefendant
Grunstein's firm . The e-mail concerned the structure of the sale of MMS to Omnicare , and
whether MMS first should be assigned by Mariner to a new limited liability company controlled
by defendant Schron, which then would sellMMS to Omnicare:
[ W ]ould having repsand warranties from [NationalSenior Care andMariner
directly to Omnicare a bigger problem ( tying the two transactionstogether) than itsolves ( helping to exculpate the Schron LLC] from liabilityfor Mariner operations)? Oris the issue just that, ifnoticed andinvestigated by theregulators we'llhave to defend against thepossibleallegations that the [MMS sale and Pharmacydeals are tied together andpartof the consideration for each other ?
I understand the back - to -back signing of Asset Purchase Agreements),
regardless of thedelay between closings, creates a calculated risk , in the
event that OIG investigates the transaction ; right, Darren ? [Darren thinks
that three or fourmonthsdelay between the closings (or longer, obviously)
would be better , but a closingattheend February ( subject to checkingwith Omnicare's outside counsel again ) ...mightbe OK --notsafe, butassuming no one atOIG is really watching closely .
(Emphasis added.)
45 In an e -mailto defendants Forman and Grunstein and others on December 9 ,
2004, defendantGrunstein's law partner further cautioned :
In connection with the parties [ ] intended sale of the assets ofMarinerMedical Supply , Inc.(MMS) to Omnicare, Inc.(immediately post-mergerbut pre- financing), healthcare regulatory lawyers for both sides told us that
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a simultaneous sale of that business could be viewed as
consideration for the pharmacy contracts that the partieswant to enterinto at the closing
( Emphasisadded.)
On TheSameDay ThatOmnicare Paid $ 40 Million To A Schron- Controlled Entity , ItObtained New 15 - Year Pharmacy Contracts From Other Schron-Controlled Entities.
46 On December 10 2004, MarinerassignedMMSto a new Schron-controlled
company, HSA Equipment LLC ( ) . That sameday , defendant Schron , through HSA ,
signed a purchase agreementwith Omnicare in which Omnicare agreed ( a) to buy MMSat some
point in the future from HSA for a total price of $ 50 million, (b ) to pay $ million of the
purchase price to HSA immediately ( i.e., on December 10, 2004), and (c) to pay the final $ 10
million six months after the closingdate oftheMMSsale.
47. Omnicare knew that, in order fordefendants Schron, Forman, andGrunstein to
close their acquisition ofMarineron December 10, 2004, they needed Omnicare's$ million
up- front payment forMMS. At the sametime, Omnicare wanted to be sure that theMariner
acquirers signed the new pharmacy contracts with Omnicare. Accordingly , and notwithstanding
Omnicare's outside counsel's advice that the pharmacy contracts and the MMS acquisition had
to be independent, Omnicare insisted that Mariner and Sava sign the new 15-year pharmacy
contracts with Omnicare prior to Omnicare paying the $40 million. Mariner and Sava complied
and signed the new contracts first.
48. Asthe partieshad contemplated, defendants Schron, Forman, and Grunstein used
Omnicare's $ 40 million up-front payment for MMS to fill the hole in defendant Schron's
financing , which enabled him to close on the larger Mariner acquisition on December 10 , 2004 .
17
Case 1 :06 - - 10149-RGS Document 33 Filed 03/04/09 Page 18 of 32
The Defendants Knowingly Failed To DiscloseAllRelevant Facts To Omnicare's OutsideCounsel
49 Omnicarehadasked its outsidecounsel to approveits simultaneouspaymentof
$40 million to a Schron-controlled entity and execution of new 15 -year pharmacy agreements
with Marinerand Sava.
50. Omnicare's outside counsel told Omnicare that he would approve the
simultaneoustransactionsonly if they were independentof each other.
51. The defendants led Omnicare's outside counsel to believe that the two
transactionswere independentof each other bymisrepresentingto him thatMarinerand Sava
were not controlled by defendant Schron, but by Harry Grunstein , defendant Leonard
Grunstein's brother. In fact, Harry Grunstein , a resident of Israel, was only the titularowner of
Marinerand Sava . Hewas also the titular owner ofNationalSenior Care, the shell entity that
was acquiringMariner (on paper). Harry Grunstein contributed no money to purchase Mariner,
Sava, or NationalSenior Care.
52. Omnicare's outside counsel conditioned his approvalof the simultaneous
transactionson defendantSchron andHarryGrunstein signing certificatesattestingto their
independence each other.
53 DefendantSchron andHarryGrunstein signed such certificateson December10,
2004. Both certificates contained factual misrepresentations . For example , in the certificate he
signed on December 10, 2004 defendantSchron represented that, among other things, he did not
haveor intendto acquire any equity interest in any entity controlledby Harry Grunstein. This
representationwasdirectly contrary to two option agreementsSchron signed that sameday on
18
Case 1 :06 - - 10149-RGS Document 33 Filed 03/04/09 Page 19 of 32
behalfof anotherofhis entities called Cammeby'sEquity HoldingsLLC ( Cammeby's . One
option agreement gave Cammeby's the right to own 66.67 % of Mariner or NationalSenior Care
in exchange for Cammeby'sforgiving a $ 75 million loan that ithad extended to NationalSenior
Care . The other option agreement gave Cammeby's the right to own 99.999 % of Sava's parent
(a holding company ) in exchange for Cammeby's forgiving a $ 100 million loan that it had
extended to that entity . Through the combination of these option agreements and outstanding
loans, Schron effectively controlled Mariner and Sava . Schron also exercised practicalcontrol
over Mariner and Sava because hehad installed Harry Grunstein as their titular owner.
54. The certificatesby defendantSchron andHarryGrunstein also falsely represented
that noneofHarry Grunstein's relatives had an equity interest in SMV, another Schron entity . In
fact, Harry Grunstein'sbrother, defendant Leonard Grunstein, had an equity interest in SMV.
55. Omnicare understood that, notwithstanding the signed certificates, Schron and
Harry Grunstein were notreally independent, and that defendantSchron controlled the nursing
homeentities thatagreed, on the sameday that Omnicaremadeits $40 million up- frontpayment,
to arrangefor the purchase of allof their patients' drugs from Omnicare for the next fifteen
years. Although Omnicare's$ 40million up- paymentfor MMSwasowed to Schron,
Omnicarewired the paymentinto an account for the benefitof, interalia, Mariner and Sava, the
entitiesnominally owned by Harry Grunstein that entered into the new 15- year pharmacy
contractswith Omnicare. Moreover, Omnicare laterpaid the remaining$10 million forMMSto
Mariner, notto Schron.
56 . Omnicare's outside counsel approved the simultaneous transactions in reliance on
thefactually inaccuratecertificates andmisrepresentationsconcerningSchron'sand Harry
19
Case 1 :06 - - 10149-RGS Document 33 Filed 03/04/09 Page 20 of 32
Grunstein'sindependence. Had Omnicare'soutside counselknown thatthe certificates
contained factualmisrepresentations, hewould nothave given his approval.
Fabricated Documents
57 . In August and September 2006 , the United States issued subpoenas to Omnicare
and various entities involvedwith Marinerthatwerecontrolledby defendantSchron.
58. After receiving the subpoenas, defendants Grunstein , Forman , and Schron created
new documents relating to the sale ofMMS and backdated them to December 10 , 2004.
DefendantSchron signed these new documents.
59. These post-hoc documents were intended to make it appear that, on December 10,
2004, Schron-controlled HSA paid Mariner $ 50 million for MMS, when in factHSA paid
nothing forMMS. The documents also were intended to create a false justification to explain
why Omnicarepaid the final $ 10 million owed on its purchase ofMMS to Mariner, one of the
entities thathad signed new pharmacy contractswith Omnicare, instead of to HSA, the party that
ostensibly had sold MMSto Omnicare.
False Claims
60. Asa resultofOmnicare's kickback, Mariner and Sava arranged for their nursing
homepatients drugs to be purchased from Omnicare after December 10 , 2004. Mariner and
Sava are contractually bound to arrange for the continuation of these kickback - induced purchases
from Omnicareuntilthe year 2019. None of thedefendantsdisclosed to MedicareorMedicaid
that claimsOmnicare submitted , or caused to be submitted, for drugspurchased forMariner and
Sava nursinghome patients resulted from Omnicare's paymentof a kickback to Mariner and
Sava. These claimswere ineligible for reimbursement because they were a result of the illegal
20
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kickback
61. Omnicare has submitted , or caused to be submitted , thousands of false or
fraudulent claimsto MedicareandMedicaid for the kickback- induceddrug purchases for
Mariner and Sava nursing home patients. These claims include, for example, claimsOmnicare
submitted, or caused to be submitted , for drugsdelivered to oneMedicaid patientin a
Mariner Sava nursinghome in Massachusetts :
Rx Count
13
7
5
3
19
4
Days Supply351195
11
75
495
1910
7
233
18
108
1
1
9
6
8
1
Drug Product Name
ALENDRONATE SODIUMAMITRIPTYLINE HCL
AMPICILLIN SODIUMAZATHIOPRINE
BACLOFENCEFTRIAXONE SODIUMCEFUROXIME AXETIL
CIPROFLOXACIN HCL
CITALOPRAM HYDROBROMIDE
COLLAGENASECYCLOSPORINE
DEXTROSE 5 % -0.45 % SALINEDEXTROSE 5 % -NORMAL SALINE
DEXTROSE 5 % -WATERDULOXETINE HCL
ENOXAPARIN SODIUM
ESOMEPRAZOLE MAG TRIHYDRATEFAMOTIDINEFLUCONAZOLEFOLIC ACID
FUROSEMIDEGABAPENTIN
GENTAMICIN /SOD CHLORIDE
HEPARIN SODIUM ,PORCINEHYDROCHLOROTHIAZIDEHYDROCODONE BIT/ACETAMINOPHEN
1
1
Total Paid
$ 944.19
$ 30.6
$ 104.24
$ 78.07
$686.33
$649.18
$21.49
$ 6.68$ 81.78
$ 365.85
$ 737.82
$ 7.00
$ 4.80
$ 436.68
$ 24.19
$ 15,444.68
$ 242.53
$ 87.84
$ 11.91
$ 74.43
$ 6.23
$ 1,898.20
$ 177.44
$ 108.93
$ 20.80
$ 3.08
11
1
4
58
4
11
2
15
220
4
5
5
25
3
566
51
315
13
435
5
555
8
50
135
1 1
21
Case 1 :06 - - 10149-RGS Document 33 Filed 03/04/09 Page 22 of 32
4
1
18
4
5
1
8
1
5
3
32
3
3
10
11
5
86
40
35
7
66
7
135
37
687
52
33
210
92
7
150
5
243
2
30
33
10
1
5
HYDROCODONE BITARTRATE /APAPHYOSCYAMINE SULFATEIBUPROFEN
INSULIN REGULAR , HUMANLACTULOSELEVOFLOXACIN
LIDOCAINE
LIDOCAINE HCLLISINOPRILLORAZEPAM
METHADONE HCL
METRONIDAZOLE
MORPHINE SULFATEMYCOPHENOLATE MOFETIL
NITROFURANTOIN MACROCRYSTALNITROFURANTOIN /NITROFURAN MACNORTRIPTYLINE HCL
NYSTATINOMEPRAZOLE
ONDANSETRON HCL
OXYCODONE HCLPANTOPRAZOLE SODIUM
PIPERACILLIN /TAZOBACTAM /DEX -IS
PNEUMOCOCCAL 23-VAL P -SAC VACPOLYETHYLENE GLYCOL 3350POTASSIUM CHLORIDE
PREDNISONEPREGABALIN
PROCHLORPERAZINE MALEATE
PROPOXYPHENE HCL
QUETIAPINE FUMARATERANITIDINE HCL
RISEDRONATE SODIUMSILVER SULFADIAZINESODIUM CL 0.9PC IRRIG . SOLN
SULFAMETHOXAZOLE / TRIMETHOPRIMTIZANIDINE HCL
1
9
$ 15.48
$ 3.55
$65.34
$ 133.42
$53.81
$ 81.71
$ 1,125.82
$3.49
$ 32.55
$ 13.72
$ 327.38
$ 22.85$ 75.32
$ 4,758.53$ 186.02
$ 26.94
$ 24.15
$ 23.19
$ 974.71
$ 321.11
$ 51.08
6.55
$ 825.58
$ 33.73
$ 46.26
$ 8.78
$ 112.14
$ 1,172.84
$ 6.10
$ 17.52
$ 2,354.59
$ 13.86
$ 388.63
$ 17.88
$ 441.60
$82.15
$ 197.60
1
2
2
3
1
3
2
21
13
1
2
11
2
45
5
412
306
3
14330
60
168
19
80
303
105
6
3
8
15
4
22
Case 1 :06 - - 10149-RGS Document 33 Filed 03/04/09 Page 23 of 32
2TRAMADOL HCL
TRAZODONE HCL
VANCOMYCIN HCLZINC OXIDE
5
15
56
$8.08
$ 3.33
$ 5,212.97
$ 17.53
5
2 10
These claims also include, for example , claims Omnicare submitted , or caused to be submitted ,
for drugsdelivered to oneMedicare patient in a Mariner/Savanursing homein Massachusetts:
Rx Count
52
32
31
DrugProductNameZYPREXAMIRTAZAPINELEVOTHYROXINESODIUMLIPITOR
METOPROLOLTARTRATE
PROTONIXTAMIFLU
TOBRADEXSYNTHROIDTOBRAMYCIN SULFATE
Days Supply1560
960
930
90
784
3014
10
60
27
Total Paid
$ 13,861.39
$ 865.43
$ 323.00
$246.09
$239.62
$ 113.66$ 113.31
$68.34
$ 32.75
$8.34
1
1
2
1 1
Count One
(False ClaimsAct Presentation Of False Claims, 31U.S.C. 3729(a )( 1) ;AgainstOmnicare, Inc.)
62. PlaintiffUnited Statesrepeatsand reallegeseach allegationin each of the
preceding paragraphs as if fully set forth herein .
63. As a result of Omnicare's kickback payments to induce the other defendants to
purchase, order , or recommend or arrange for the purchasing or ordering of drugs from Omnicare
for Mariner and Sava nursing home patients, in violation of the anti-kickback statute, 42 U.S.C.
1320a- ) ( ) , allofthe claimsOmnicare presented, or caused to be presented, to Medicare
andMedicaid for those drugs are false or fraudulent. Accordingly , Omnicare knowingly
23
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presented , or caused to be presented, false or fraudulent claims to officials of the United States in
violation of31U.S.C. 3729 a )( 1) .
64. By virtue ofthe false orfraudulentclaims Omnicare presented, or caused to be
presented, the United Stateshas suffered actual damages and is entitled to recovertreble
damagesplus a civilmonetarypenalty for each false claim .
Count Two
( False ClaimsAct: MakingOr Using False RecordsOr Statements To Cause Claims To Be
Paid, 31 U.S.C. 3729( a) ( 2) ;
AgainstOmnicare, Inc.)
65. PlaintiffUnited Statesrepeatsandreallegeseach allegation in each of the
precedingparagraphsas if fully set forth herein .
66 . Omnicare knowingly made, used, or caused to be made or used , false recordsor
statements to cause the United States to pay or approve false or fraudulent claims, in violation of
31U.S.C. ( a)( ). The false records or statements were the false certifications and
representations of full compliance with all federal and state lawsand regulations prohibiting
fraudulent actsand false reporting, includingbutnot limited to theanti-kickback statute, 42
U.S.C. -7b. Omnicare made or caused to bemade such false certifications and
representations in agreements under state Medicaid programsandMedicare Part D when seeking
to ensure thatMedicaidandMedicarewould reimbursefor the drugsthatOmnicaredispensed to
Mariner and Sava nursing homepatients.
67. Byvirtue ofthe false recordsor statementsOmnicaremade, used, or caused to be
madeor used the United States has suffered actualdamages and is entitled to recover treble
damages plus a civilmonetary penalty for each false claim .
24
Case 1 :06 - - 10149-RGS Document 33 Filed 03/04/09 Page 25 of 32
Count Three
(False ClaimsAct: MakingOrUsing False Records OrStatements To Conceal, Avoid , Or
Decrease An Obligation To Pay Money To The United States, 31 U.S.C. 3729(a )(7) ;
AgainstOmnicare, Inc.)
68. Plaintiff United States repeats and realleges each allegation in each ofthe
precedingparagraphsas if fully set forth herein.
69. Omnicare knowingly made used, or caused to be made or used , false records or
statements to conceal, avoid , or decreaseMedicare Part D sponsors obligations to pay or
transmit money or property to the Government, in violation of 31U.S.C. 3729(a )( 7 .
70 The false recordsor statements were the false certifications and representations
Omnicaremade or caused to bemade in Medicare Part agreementswhen seeking to ensure
thatMedicarewould reimburse for the drugs that Omnicare dispensed toMariner andSava
nursing homepatients. Those agreements contained certificationsand representationsof full
compliance with all federal and state laws and regulations prohibiting fraudulent acts and false
reporting, including butnot limited to the anti-kickback statute, 42 U.S.C. .
71. The false recordsor statementswere submitted to the UnitedStates in conjunction
with sponsors agreements to operate one ormore plans pursuant to Part D of the Medicare
program , which includes an annualreconciliation process and risk- sharing arrangements.
Consequently , any low - incomesubsidy and reinsurance payments made to Part D sponsors as a
resultofOmnicare'sviolationsoftheanti-kickback statutewere owed to CMSin the
reconciliation process, as well as any risk - sharing amounts resulting from Omnicare's anti
kickback statute violationsthatwere paid to Part D sponsors under the risk-sharing
arrangements .
25
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72 By virtue of the false recordsor statementsOmnicaremade, used, or caused to be
madeor used, the United States hassuffered actualdamagesand is entitled to recovertreble
damages plus a civilmonetary penalty for each false claim .
Count Four
( False Claims Act : Causing The Presentation Of False Claims, 31 U.S.C. 3729 (a )(1) ;
Against Rubin Schron, Leonard Grunstein Murray Forman, Mariner Health Care, Inc.,
and SavaSeniorCareAdministrativeServices, LLC)
73. PlaintiffUnited Statesrepeatsand reallegeseach allegation in each of the
preceding paragraphs as if fully set forth herein .
74. Asa resultof the solicitation and receiptby defendants Schron, Grunstein,
Forman,Mariner, and Sava of Omnicare's kickback payments to obtain referrals ofMariner and
Savanursinghomepatients for drug purchases, in violation ofthe anti-kickback statute, 42
U.S.C. - ( ) , all of the claimsOmnicaremade, or caused to bemade, to Medicaid
andMedicarefor thosedrugs are false or fraudulent. Accordingly, defendantsSchron,
Grunstein, Forman, Mariner, and Sava knowingly caused false or fraudulent claims to be
presented to officials ofthe United States in violation of 31U.S.C. 3729(a )(1).
75. By virtue ofthe false or fraudulentclaimsthatdefendants Schron, Grunstein,
Forman, Mariner, and Sava knowingly caused to bepresented, theUnitedStateshas suffered
actual damages and is entitled to recover treble damages plus a civilmonetary penalty for each
false claim
26
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Count Five
(False Claims Act Making Or Using False Records Or Statements To Cause Claims To Be
Paid , 31 U.S.C. 3729(a )(2 ) ;
Against Rubin Schron , Leonard Grunstein ,Murray Forman ,Mariner Health Care , Inc.,
and SavaSeniorCareAdministrativeServices, LLC)
76 PlaintiffUnited States repeats and realleges each allegation in each of the
preceding paragraphs as if fully set forth herein .
77. Asa result of the solicitation and receiptby defendants Schron, Grunstein ,
Forman,Mariner, and Sava of Omnicare's kickback payments to obtain referralsofMariner and
Savanursing homepatients for drugpurchases, in violation of the anti-kickback statute, 42
U.S.C. - )( ), defendantsSchron, Grunstein , Forman, Mariner, and Sava knowingly
caused false recordsorstatementsto bemadeor used to cause the UnitedStatesto pay or
approve false or fraudulent claims. The false records or statements were the false certifications
and representationsoffull compliance with all federal and state lawsand regulationsprohibiting
fraudulentactsand false reporting, includingbut not limited to the anti-kickback statute, 42
U.S.C. 1320a-7b. DefendantsSchron, Grunstein, Forman, Mariner, and Sava caused such false
certifications and representations to bemade in agreements under stateMedicaid programsand
MedicarePart D when seekingto ensure that Medicaid andMedicarewould reimburse for the
drugsthat Omnicare dispensed to Mariner and Sava nursing homepatients.
78. By virtueofthe false recordsor statementsdefendantsSchron, Grunstein,
Forman, Mariner, and Sava caused to be made or used , the United Stateshas suffered actual
damages and is entitled to recover treble damages plus a civilmonetary penalty for each false
claim .
27
Case 1 :06 - - 10149-RGS Document 33 Filed 03/04/09 Page 28 of 32
Count Six
(False ClaimsAct: Conspiracy To Submit False Claims, 31U.S.C. 3729 (a )(3) ;Against Defendants )
79 PlaintiffUnited States repeats and realleges each allegation in each ofthe
preceding paragraphsas if fully set forth herein.
80 Each ofthe defendantsconspired with the other defendantsto arrange for
Omnicareto makekickbackpaymentsin exchange for referralsofMariner and Savanursing
homepatients for drugpurchases, in violation of the anti-kickback statute, 42 U.S.C. 1320a
( ) ( 2 ), thereby causingallofthe claims, from on orshortly after December10, 2004, through
the present, to Medicaid and Medicare for those drugs, to be false or fraudulent. Accordingly,
each of thedefendants conspired to defraud the United Statesby getting false or fraudulent
claims allowed or paid , in violation of 31 U.S.C. 3729(a) ( 3) .
81. By virtue of the false or fraudulent claimsdefendants conspired to getallowed or
paid, the United States has suffered actual damages and is entitled to recover treble damages plus
a civilmonetarypenalty for each false claim .
CountSeven(False ClaimsAct: MakingOrUsing False Records Or Statements To Conceal, Avoid, Or
Decrease An Obligation ToPayMoney To The United States, 31U.S.C. 3729(a )( 7) ;Against Rubin Schron, Leonard Grunstein, Murray Forman,Mariner Health Care, Inc.,
and SavaSeniorCare Administrative Services , LLC)
82 Plaintiff United States repeats and realleges each allegation in each of the
precedingparagraphsas iffully set forth herein.
83. Defendants Schron , Grunstein , Forman, Mariner , Sava knowingly caused to
bemade or used false records or statements to conceal, avoid , or decrease Medicare Part D
28
Case 1 :06 - - 10149-RGS Document 33 Filed 03/04/09 Page 29 of 32
sponsors' obligationsto pay or transmitmoney or property to the Government, in violation of31
U.S.C. 3729 a) )
84. The false records or statementswere the false certifications and representations
Defendants Schron, Grunstein, Forman , Mariner , and Sava caused to bemade in agreements
between Omnicare andMedicarePart D sponsorswhen seekingto ensurethatMedicarewould
reimburse for the drugs that Omnicare dispensed to Marinerand Sava nursing home patients.
Those agreements contained certificationsand representationsoffull compliance with all federal
and state lawsand regulations prohibiting fraudulentacts and false reporting, includingbut not
limitedto the anti-kickback statute, 42 U.S.C. - 7b .
85. The false records or statements were submitted to the United States in conjunction
with Part D sponsors' transmittalof costinformationto CMSfor use in the annualreconciliation
process. Consequently, if demanded a post- reconciliation payment from any such Part D
sponsor, itdemanded too little.
86 . By virtue of the false records or statements defendantsSchron, Grunstein,
Forman, Mariner, and Sava caused to bemadeor used, the UnitedStateshas sufferedactual
damages and is entitled to recover treble damages plus a civilmonetary penalty for each false
claim .
CountEight(UnjustEnrichmentAnd Disgorgement; AgainstOmnicare, Inc.)
87. PlaintiffUnited States repeats and realleges each allegation in each of the
preceding paragraphsas if fully set forth herein .
88. This is a claim for the recovery ofmonies by which Omnicare has been unjustly
enriched
29
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89. By directly or indirectly obtaining government funds to which it was not entitled ,
Omnicare wasunjustly enriched, and is liable to account for and to disgorge such amounts, or the
proceeds therefrom , which are to be determined at trial, to the United States.
Count Nine
(Payment By Mistake; Against Omnicare, Inc.)
90 . PlaintiffUnited States repeats andreallegeseach allegationin each of the
preceding paragraphs as if fully set forth herein .
91. This is a claim for the recovery ofmoniespaid by theUnited States to Omnicare
as a resultofmistaken understandingsof fact.
92 . The false claims that Omnicare presented to the United States were based upon
mistakenorerroneousunderstandingsofmaterialfact.
93 The United States, acting in reasonable relianceon the accuracy and truthfulness
of the informationcontained in the claims, paid Omnicare, directly or indirectly, certain sumsof
money to which Omnicare was notentitled, and Omnicare isthus liable to account for and to pay
such amountsto theUnitedStates.
Prayer For Relief
WHEREFORE , the United States demands and prays that judgment be entered in favor of
the United States as follows :
1 On CountsOne, Two, and Three under the False ClaimsAct, againstOmnicare,
Inc., for theamountof the United States' damages, trebled asrequired by law , and such civil
penalties as are required by law , together with such further relief asmay be just and proper.
30
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2 On Counts Four, Five, and Seven under the False Claims Act, againstRubin
Schron, Leonard Grunstein , Murray Forman, Mariner Health Care, Inc., and SavaSeniorCare
AdministrativeServices, LLC, for the amountof theUnitedStates' damages, trebled as required
by law , and such civil penaltiesas arerequired by law , togetherwith such further reliefasmay
bejust and proper.
3 . On Count Six under the False ClaimsAct, against alldefendants, for the amount
ofthe United States damages, trebled as required by law , and such civilpenaltiesas are required
by law, together with such further relief asmay be just and proper.
4 . On Counts Eightand Nine, againstOmnicare, Inc., for unjust enrichmentand
paymentbymistake, for the damagessustained and/ oramountsbywhich Omnicarewasunjustly
enriched or by which Omnicare retained illegally obtained monies, plus interest, costs , and
expenses, and such further reliefasmay be just and proper.
31
Case 1 :06 - - 10149-RGS Document 33 Filed 03/04/09 Page 32 of 32
Respectfully submitted,
MICHAEL F.HERTZ
Acting Assistant Attorney General
MICHAEL J. SULLIVAN
United States Attorney
Dated: March 4 , 2009
ByGREGG SHAPIRO
CHRISTINE WICHERS
Assistant United States Attorneys
One Courthouse Way , Suite 9200Boston ,MA 02210
(617) 748-3100
JOYCE R.BRANDA
DANIEL R.ANDERSON
LAURIE A.OBEREMBT
Attorneys, Civil Division
U.S.Departmentof Justice
P.O.Box 261, Ben Franklin Station
Washington, D.C.20044
(202) 514-3345
32