PharMerica to Pay $31.5 Million to Settle False Claims Lawsuit

PharMerica Corporation will pay $31.5 million to resolve a false claims lawsuit.

The case was originally filed by Jenny Buth, a pharmacist formerly employed by PharMerica as its pharmacy operations manager in Pewaukee, Wisconsin.

Pharmerica was represented by Holland & Knight in Boston and Reinhart Boerner in Milwaukee.

Buth was represented by Nola J. Hitchcock Cross of the Cross Law Firm in Milwaukee, Wisconsin.


The lawsuit alleged that that PharMerica submitted false claims to Medicare for drugs dispensed without valid prescriptions in violation of the Controlled Substances Act.

PharMerica contracts with nursing homes and skilled nursing facilities to dispense medications to their residents, most of whom are Medicare beneficiaries.

Many of the medications dispensed by PharMerica are Schedule II drugs regulated by the Controlled Substances Act, such as oxycodone and fentanyl, that are tightly controlled because they can cause significant harm if used improperly and they have been found to have a high potential for abuse.

After investigation, the government filed a complaint in intervention with Buth’s lawsuit in Milwaukee, Wisconsin.

The government’s complaint alleged that PharMerica’s conduct violated the Controlled Substances Act by dispensing Controlled II drugs without confirming that a physician had first made a medical judgment as to whether the narcotics were medically necessary for the Medicare beneficiaries who were receiving them in nursing homes and skilled nursing facilities.

PharMerica will pay $8 million to resolve these allegations.

PharMerica will pay $23.5 million to resolve allegations in the government’s complaint in intervention to the effect that PharMerica violated the False Claims Act by knowingly causing the submission of false claims to Medicare Part D for improperly dispensed Schedule II drugs.

“Blowing the whistle can be very rewarding, both financially and ethically,” Cross said.

“When Buth blew the whistle on PharMerica Corporation by filing a False Claims Act case under seal six years ago, she did so with a motivation of protecting nursing home and skilled nursing facility residents and stopping violations of the Controlled Substance Act,” Cross said.

As a new pharmacist, Buth had a heightened concern for the elderly and disabled population who were the primary recipients of these controlled narcotics.

She initially went to the Drug Enforcement Administration about her concerns and later came to Cross Law Firm which filed a False Claims Act claim for her.

The case is significant both because it addresses the Controlled Substances Act and because it claims damages sustained when claims are submitted under Medicare Part D.

“It has been a long six years and a terrific amount of work by the Department of Justice, the U.S. Attorneys’ office and our law firm, but both the public and our client are big winners financially and protections will be in place for vulnerable Medicare recipients ,” said Cross.

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