Court Strengthens “Public Disclosure Bar” in Dismissing Whistleblower Lawsuit Against PharMerica: Good for Providers

Last month, a federal district court dismissed a False Claims Act (FCA) qui tam action that was brought against PharMerica by a whistleblower. The suit claimed that PharMerica, the nation’s second largest long-term care pharmacy, had engaged in an illegal “swapping” arrangement with nursing homes to ensure prescription referrals for its Medicare Part-D patients. The whistleblower, Marc Silver, claimed that he discovered the alleged swapping arrangement by examining publicly available documents, including the company’s annual Form 10-K reports.

A “swapping arrangement,” in the long-term care context, is an arrangement where a pharmacy offers a facility underpriced Medicare Part-A drugs so it could obtain the facility’s more lucrative Medicare Part-D business. Mr. Silver said that, based on his review of PharMerica’s financial information disclosed in its 10-K filings, the company “must have engaged in swapping.” 

Using the public disclosure bar (which prohibits a qui tam action based off of information already available to the public, unless the whistleblower was the original source of the information), the court rejected Mr. Silver’s lawsuit, stating that “[A]ll of Silver’s alleged facts are derivative of the information he gathered from other, mostly public, sources.”

It is worth noting that PharMerica’s defense counsel was able to exploit the issuance of this everyday business filing to toss a potentially devastating multi-million dollar lawsuit because counsel was well acquainted with the particularities of the FCA.

Frier Levitt represents long term care facilities in a variety of matters, including defending facilities against qui tam actions. If you have been served with a qui tam complaint or are currently under investigation, you need a healthcare law firm that is well-versed in the nuances of the FCA and that remains up-to-date will all of the latest developments surrounding this specialized area of law. Contact Frier Levitt to speak to an attorney today.

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