On May 15, 2015, the Department of Justice (DOJ) announced that PharMercia Corporation, a comprehensive long-term provider of pharmacy services, operating across the country, agreed to pay the U.S. Government $31.5 million for allegedly violating the Controlled Substance Act (CSA) by knowingly dispensing Schedule II controlled drugs to residences of long-term care facilities without a valid prescription from a physician.  In addition, PharMercia also allegedly violated the False Claims Act (FCA) when it submitted claims to Medicare for these improperly dispensed drugs.

The Controlled Substance Act (CSA) is a federal law that regulates the prescribing and dispensing of psychoactive drugs, including narcotics, hallucinogens, depressants, and stimulants.  Schedule II controlled drugs are drugs or other substances that have a high potential for abuse.  According to the lawsuit filed on behalf of the government by Jennifer Denk, a pharmacist formerly employed by PharMerica and the whistleblower in this qui tam case, PharMercia allowed nursing home staff to administer Schedule II controlled substances, such as oxycodone and fentanyl, to its long-term residences — mostly elderly patients living in nursing homes — without obtaining a valid written prescription from their doctors.  In addition, the government alleged that PharMerica also allowed pharmacists to dispense the drugs without confirming that the prescriptions were legitimately approved by the patient’s doctor or medically necessary.  This type of practice is a violation of the CSA.

In the lawsuit, the government also accused PharMercia of billing Medicare for Schedule II medication administered during the long-term care of patients in nursing homes — medication that did not get the proper approval from the patient’s doctor.  Billing for improperly dispense drugs is a violation of the FCA and is considered Medicare fraud and $23.5 million of the settlement was allocated to settling the FCA claims.

A whistleblower who files a case against a company that has committed fraud against the government, may receive compensation of up to 30 percent of the amount ultimately recovered by the government.