Michigan officials say Omnicare, owner of Specializes Pharmacy Services, will pay $11.6 million to settle a whistle-blower case brought under the Michigan Medicaid False Claim Act.

Michigan Attorney General Mike Cox said the settlement came in response to allegations that from 2002 to 2009, Specialized Pharmacy Services charged Medicaid more than it did to private insurance companies for certain prescriptions.  Under Michigan law, a pharmacy cannot bill Medicaid more for drugs than it customarily accepts from a private health insurer.  The settlement includes reimbursement of state and federal Medicaid dollars and penalties.

Specialized Pharmacy is the largest long-term care pharmacy provider in Michigan, billing prescriptions for more than 25,000 residents of nursing homes and assisted living facilities in Michigan each month.  Specialized Pharmacy and the private insurers cooperated with the Attorney General’s Office during the course of the investigation.

The suit was filed on behalf of Michigan and other states by a former employee of Omnicare who worked as an accountant handling Medicaid reimbursement for the company.  The former employee filed a complaint under Michigan’s Medicaid Whistleblower’s Act statute, which fights waste, fraud and abuse in the Medicaid system.  The statute provides whistleblowers with legal protection and offers a financial incentive to anyone willing to bring a civil suit against and assist in the investigation and prosecution of a violator of the Michigan Medicaid False Claims Act.

In an unrelated case, state officials reached a civil settlement against Specialized Pharmacy Services and Omnicare in 2006, recovering $52.5 million in overpayments and penalties for allegations of extensive improper billing for Medicaid patients.  In 2009, Specialized Pharmacy’s former president, Daniel Lohmeier pleaded no contest to two counts of attempted Medicaid fraud in connection with the 1999-2005 false billings.