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Former Omnicare Auditor Accused Company Of False-Claims Violations

By Peter Loftus Of DOW JONES NEWSWIRES Omnicare Inc.'s (OCR) former internal auditor has accused the health-care company of defrauding government health programs by submitting false claims for reimbursement for services and engaging in other improper conduct. The allegations surface at a tumultuous time, days after longtime chief executive, Joel Gemunder, unexpectedly retired. The company reported disappointing second-quarter results Thursday, and newly named interim CEO James Shelton said Omnicare has been plagued by a negative corporate culture that he vowed to fix. The allegations were contained in a lawsuit filed last year in federal court in Chicago by John Stone, who served as vice president of internal audit from 2004 until earlier this year. Stone had filed the lawsuit confidentially on behalf of the U.S. and state governments under a federal law designed to protect and potentially reward would-be whistleblowers. But the suit was unsealed in June after federal and state authorities declined to intervene in the case. Omnicare disclosed the lawsuit in a regulatory filing Thursday. Omnicare, which provides pharmacy services to nursing homes and assisted-living facilities, has gotten into legal trouble before. In November, the Covington, Ky., agreed to pay $98 million to settle government allegations that it solicited or paid a variety of kickbacks involving business partners. Omnicare said the settlement contained no finding of wrongdoing or admission of liability. In the newly public lawsuit, former auditor Stone alleged Omnicare violated the federal False Claims Act and certain state laws by submitting claims for reimbursement for certain "ancillary services" that did not conform with regulations for Medicare and Medicaid, the government health programs for the elderly and poor. The suit also alleges Omnicare submitted claims for reimbursement from newly acquired pharmacies that were in violation of Medicaid and Medicare regulations, that it violated certain Food and Drug Administration regulations regarding the storage and handling of a drug. And the suit alleges Omnicare violated Medicaid billing regulations relating to so-called "usual and customary charges," Omnicare said in its regulatory filing. Neither Stone nor his attorneys could immediately be reached. Omnicare said in its regulatory filing the allegations are without merit and it plans to vigorously defend itself if the action is pursued. An external spokesman declined further comment. Omnicare shares fell 7.9% to $23.27 in recent trading. -By Peter Loftus, Dow Jones Newswires; +1-215-656-8289; [email protected]

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