Omnicare Dead Weight

Court filings suggest Omnicare (OCR Quote - Cramer on OCR - Stock Picks) has been relying on dead patients for more business than it should.

The giant institutional pharmacy, which supplies medications to nursing homes, now stands accused of billing Medicaid for drugs dispensed to dead people. The company has been sued in the past for allegedly reselling drugs that went unused by dead people as well.

The new allegations come as part of a high-profile investigation that has resulted in 148 criminal charges against a recent division-level executive of Omnicare. Michigan Attorney General Mike Cox has accused Daniel Lohmeier, former president of Omnicare-owned Specialized Pharmacies, of orchestrating the biggest criminal Medicaid fraud case in state history.

Omnicare portrayed the development as "unfortunate" while offering support for Lohmeier, whose attorney failed to return a phone call from TheStreet.com seeking comment for this story.

Cox filed the charges last month after Omnicare set aside $54 million in anticipation of settling the case. When announcing his move -- at the start of his re-election campaign -- Cox signaled that Lohmeier could spend years in prison while making clear that his investigation continues.

Experts on Wall Street raised their eyebrows. Some saw little more than political grandstanding. But others, worried about problems at the company already, were rattled by the news.

"If Mr. Lohmeier seeks leniency by providing state's evidence, the potential cost to OCR could increase dramatically," Bear Stearns analyst Jason Gurda wrote last month. "Recall that the A.G. could have had a $50 million-plus settlement and good press coverage without the criminal charges. ... We believe the A.G. must be very confident in the evidence acquired since a dramatic civil settlement could easily have been achieved."

« Previous Page

1 2 3 4 5

Next Page »