Medicare Compliance & Reimbursement

Court says 'disturbing' lack of legal authority proved fatal to lawsuit.

A federal appeals court let a New Jersey provider-pharmacy off the hook Sept. 1 - but not without some strong misgivings.

Whistleblower Thomas Quinn, the former regional comptroller for Omnicare subsidiary Pompton Nursing Home Suppliers, brought the false-claims action. When medications were returned for resale, Quinn alleged, the pharmacy routinely credited Medicaid with only 50% of what Medicaid had originally paid the pharmacy. Then, Pompton pocketed the remaining money to cover the "expenses of restocking and redispensing," according to court documents. 

However, the court said that Quinn's accusations didn't hold water because the evidence - and the regulations - were simply missing.

Claims routinely get adjusted for payment errors, such as over- or underpayments, or when a service is not provided. The problem: None of the regulations in the New Jersey Administrative Code instruct pharmacies on how to credit or adjust a claim for medications returned for recycling. That essentially gives Pompton the green light to re-dispense medications. Quinn also purportedly failed to provide a single claim proving that Medicaid paid twice for Pompton's medications.

"We are constrained by the lack of a regulation requiring that credit be given for recycled medications," the decision reads. "We believe that Congress and/or the New Jersey legislature might serve Medicaid well if this lack of regulation were corrected."

To read the decision (United States ex rel. Quinn v. Omnicare Inc., 3d Cir., No. 03-2187) go to http://www.ca3.uscourts.gov/opinarch/032187p.pdf.