Federal judge says case against PharMerica can proceed

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A Milwaukee federal judge has denied a pharmacy services company’s attempt to dismiss parts of a lawsuit alleging it violated federal laws by dispensing narcotics without a doctor’s approval.

Eastern District of Wisconsin Senior Judge Charles Clevert ruled Wednesday that the government’s case against the Louisville, Ky.-based longterm care services provider PharMerica Corp. — as well as the case brought by whistleblower Jennifer Buth — will proceed.

PharMerica, which has a facility in Pewaukee, is accused of issuing prescription medication without doctors’ orders, instead allowing staff from nursing homes to send requests. The medication was covered by Medicare Part D premiums, as the company was subcontracted and paid by the federal government.

The company allegedly used that procedure thousands of times between May and September 2008, and filed at least 250 false or fraudulent claims for payment between 2007 and 2009. A raid of the Pewaukee site turned up boxes of unsigned orders.

Buth, a former operations manager with the company, originally brought the suit after she was fired, but the government took over the investigation and prosecution.

The case was filed under the False Claims Act in 2009 and unsealed last year. PharMerica sought to dismiss three counts brought by the federal government and one count of unlawful retaliation brought by Buth. The company argued the government did not bring claims that were provable and that there was no proof that it lost any money as a result of the company’s alleged actions.

But in his order, Clevert shot both arguments down, saying the complaints filed by Buth and the government were adequate to proceed. A scheduling conference is scheduled for Oct. 20.

Nola Hitchcock Cross, an attorney with Cross Law Firm SC, Milwaukee who represents Buth, said Clevert’s decision is important because he essentially “decided 90 percent” of it.

“The real question is … is this good to go on the legal theories?” Hitchcock Cross said. “We’re not worried about the proof. We’ve got piles of that. We’re not worried about boxes and boxes of documents.”

Mark Cameli, an attorney with Reinhart Boerner Van Deuren SC representing PharMerica, referred questions to Michael Manthai, an attorney with Holland & Knight LLP. Reached Monday, Manthai said his client did not want to comment on pending litigation.

Lawyers who have experience with the False Claims Act and healthcare cases have said they are watching the case. The Medicare Part D prescription drug program began in 2006, and government prosecution of potential wrongdoing began only recently.

PharMerica issued 40 million prescriptions between 2007 and 2009, and nearly half of its business comes from payments associated with the Medicare Part D program.

Prosecutors say PharMerica also employed the same procedures at its sites in Florida, California and Colorado and had previously been warned about the practices. The DEA audited the company’s Indiana facility in 2000 and issued a warning about its noncompliance.

The company’s own auditor prepared a slideshow in 2007 warning that only one of the company’s pharmacies was following the rules correctly, and most were still sending out drugs without a valid prescription.

The Associated Press also contributed to this report.