UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

UNITED STATES OF AMERICA and 

THE STATE OF ILLINOIS, 

ex rel. ALAN J. LITWILLER,

Plaintiff, 

v. 

OMNICARE, INC., 

Defendant. 

Civil Action No: 1:11-cv-08980 

Hon. Robert M. Dow, Jr.

RESPONSE TO DEFENDANT’S

MOTION TO DISMISS RELATOR’S COMPLAINT

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TABLE OF CONTENTS

I. Background Facts ..............................................................................................................1

Forgiveness of Accounts Receivable - (“A/R Conduct”) ........................................3

Improper Discounts for Pharmaceutical Services - (“Discounts Conduct”)............3

Improper Refunds and “Credits” - (“Refunds/Credits Conduct”) ..........................3

Discounts and Subsidies for Third Party Services - (“SigmaCare Conduct”).........4

Free Consulting Services and Other Services - (“Free Services Conduct”)............4

Omnicare Foundation - (“Omnicare Foundation Conduct”) ...................................5

II. Summary Of The Argument.............................................................................................5

III. The A/R Conduct Claim Is Not Barred By Ruscher Under The First-To-File Rule 

Because The Material Facts Here Differ Substantively In Nature And Scope ............7

A. Ruscher Involves Collections From A Materially Different Group Of

Nursing Facilities.....................................................................................................8

B. The Scheme In Ruscher Did Not Allege Any Conduct Related To

Or Overlapping With The Scheme In Illinois..........................................................9

C. The Scheme In The Present Case Involves Forgiveness Of Debts For

Products and Services That Are Not At Issue In Ruscher.....................................10

D. Ruscher Cannot Trigger The First-To-File Bar Because Omnicare

Concedes The Allegations In That Case Are Insufficient .....................................11

IV. The Discounts Conduct Is Not Barred Because The Subpoena For Documents

Does Not Constitute A Public Disclosure And Relator Is An Original Source ..........12

V. Relator’s Complaint Satisfies The Pleading Requirements

Of Rule 12(b)(6)................................................................................................................16

A. Relator Adequately Pleads Knowing Violations ...................................................17

B. The Allegations, Reasonable Inferences And Further Consistent Facts

Are Sufficient To Demonstrate Omnicare Offered Products And Services

At Below Fair Market Value Which Constitutes Unlawful Remuneration ..........17

1. A/R Conduct ..............................................................................................18

2. Discounts Conduct.....................................................................................20

3. Refunds/Credits Conduct ..........................................................................20

4. SigmaCare Conduct ...................................................................................21

5. Free Services Conduct ...............................................................................22

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6. Omnicare Foundation Conduct..................................................................22

VI. Relator’s Complaint Satisfies the Pleading Requirements

Of Rule 9(b) .....................................................................................................................23

A. Specific Allegations of Submission of False Claims.................................23

B. Specific Allegations As To The Schemes..................................................26

VII. Conclusion ........................................................................................................................28

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TABLE OF AUTHORITIES

CASES

Campbell v. Redding Med. Ctr.,

421 F.3d 817 (9th Cir. 2005) ..................................................................................................... 11

Glaser v. Wound Care Consultants, Inc.,

570 F.3d 907 (7th Cir. 2009) ................................................................................................ 12-14

Highsmith v. Chrysler Credit Corp.,

18 F.3d 434 (7th Cir. 1994) ....................................................................................................... 16

Reynolds v. CB Sports Bar, Inc.,

623 F.3d 1143 (7th Cir. 2010) ................................................................................................... 16

U.S. ex rel. Batiste v. SLM Corp.,

740 F. Supp. 2d 98 (D.D.C. 2010)............................................................................................ 11

U.S. ex rel. Batty v. Amerigroup Illinois, Inc.,

528 F.Supp.2d 861 (N.D. Ill. 2007)...................................................................................... 8, 15

U.S. ex rel. Bledsoe v. Community Health Sys.,

342 F.3d 634 (6th Cir. 2003) ..................................................................................................... 11

U.S. ex rel. Chovanec v. Apria Healthcare Grp., Inc.,

606 F.3d 361 (7th Cir. 2010) ...................................................................................7, 9-10, 28-29

U.S. ex rel. Foster v. Bristol-Myers Squibb Co.,

587 F. Supp. 2d 805 (E.D. Tex. 2008)...................................................................................... 21

U.S. ex rel. Feingold v. AdminaStar Fed., Inc.,

324 F.3d 492 (7th Cir. 2003) ................................................................................................ 12-13

U.S. ex rel. Fowler v. Caremark RX, L.L.C.,

496 F.3d 730 (7th Cir. 2007) ..................................................................................................... 14

U.S. ex rel. Geschrey v. Generations Healthcare, LLC,

922 F. Supp. 2d 695 (N.D. Ill. 2012). ................................................................................. 23, 26

U.S. ex rel. Goldberg v. Rush Univ. Med. Ctr.,

929 F.Supp. 2d 807 (N.D. Ill. 2013)......................................................................................... 26

U.S. ex rel. Grynberg v. Koch Gateway Pipeline Co.,

390 F.3d 1276 (10th Cir. 2004) ................................................................................................. 15

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U.S. ex rel. Howard v. Urban Inv. Trust, Inc.,

2009 WL 2252252 (N.D. Ill. Jul. 29, 2009).............................................................................. 16

U.S. ex rel. Klaczak v. Consolidated Med. Transp.,

458 F. Supp. 2d 622 (N.D. Ill. 2006)................................................................................... 17-18

U.S. ex rel. McLain v. Fluor Enterprises, Inc.,

2013 WL 4721365 (E.D. La. Sept. 3, 2013)............................................................................. 10

U.S. ex rel. Merena v. SmithKline Beecham Corp.,

205 F.3d 97 (3rd Cir. 2000) ...................................................................................................... 7-8

U.S. ex rel. Munoz v. Computer Sys. Inst., Inc.,

2013 WL 5781810 (N.D. Ill. Oct. 25, 2013)........................................................................ 16-17

U.S. ex rel. Saldivar v. Fresenius Med. Care Holdings, Inc.,

906 F. Supp. 2d 1264 (N.D. Ga. 2012)..................................................................................... 14

U.S. ex rel. Schubert v. All Children's Health Sys., Inc.,

2013 WL 1749861 (M.D. Fla. Jan. 8, 2013)............................................................................. 14

U.S. ex rel. Soulias v. Northwestern Univ.,

2013 WL 3275839 (N.D. Ill. June 27, 2013)............................................................................ 25

U.S. ex rel. Trombetta v. EMSCO Billing Servs., Inc.,

2002 WL 34543515 (N.D. Ill. Dec. 5, 2002)................................................................ 25, 26, 27

U.S. ex rel. Walburn v. Lockheed Martin Corp.,

431 F.3d 966 (6th Cir. 2005) ............................................................................................... 11, 15

STATUTES

31 U.S.C. § 3729, et seq.................................................................................................................. 1

31 U.S.C. § 3730(b)(5) ................................................................................................................... 7

42 U.S.C. § 1320a-7b(b)............................................................................................................... 16

740 ILCS § 175/1, et seq................................................................................................................. 1

740 ILCS § 92/1.............................................................................................................................. 1

740 ILCS 175/4(b)(5) ..................................................................................................................... 7

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RULES

Fed. R. Civ. P 12(b)(6)......................................................................................................... 6, 16-17

Fed. R. Civ. P 9(b) .................................................................................................. 7, 11, 23, 25, 26

OTHER AUTHORITIES

U.S. ex rel. Maguire v. Omnicare, Inc.,

First Am. Compl., No. 02-cv-11436 (D. Mass. Filed June 21, 2005) ................................. 14-16

U.S. ex rel. Maguire v. Omnicare, Inc.,

Order of Dismissal, No. 02-cv-11436 (D. Mass. Filed Nov. 3, 2009)................................. 14-16

U.S. ex rel. Ruscher v. Omnicare,

Pl. Sec. Am. Compl., No. 4:08-cv-03396, (S.D. Tex. Filed Sep. 11, 2009)...............6-12, 28-29

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Relator, Alan J. Litwiller, by his undersigned attorneys, submits the following response to 

Defendant Omnicare, Inc.’s Motion to Dismiss Relator’s Complaint. Omnicare’s Motion is an 

example of a now commonplace strategy of qui tam defendants, particularly Omnicare, to 

demand dismissal if a Relator does not yet have all the evidence needed to present a closing 

argument to a jury. The Motion distorts pleading standards, seeks to hold Relator to an 

impossibly high burden, and recasts the nature of allegations in other cases to suggest the 

allegations here are duplicative. None of these arguments justify dismissal of the Complaint.

I. Background Facts

Relator brings this action for damages and civil penalties on behalf of the United States 

of America and the State of Illinois, arising from: (a) false statements and records made or 

caused to be made by Omnicare to the United States or its agents or intermediaries in violation of 

the Federal False Claims Act (“FCA”), 31 U.S.C. § 3729, et seq.; and (b) false statements and 

records made or caused to be made by Omnicare to the State of Illinois or its agents or 

intermediaries in violation of the Illinois False Claims Act (“IFCA”), 740 ILCS § 175/1, et seq.; 

and (c) violations of the Illinois Insurance Claims Fraud Prevention Act (“ICFPA”), 740 ILCS § 

92/1, et seq. Omnicare is an institutional pharmacy and one of the nation’s largest providers of 

pharmaceutical products and services to nursing facilities, long-term care facilities, assisted 

living communities, and other chronic care settings (“the facilities”). (Compl. ¶ 3). 

Payments for Ominicare’s pharmaceutical products and services comes in large part 

through Medicare and Medicaid. (Compl. ¶ 4, 88). During the period of at least January 2009 

through the present, Omnicare engaged in a series of schemes to offer and pay illegal 

inducements (including credits, rebates, payments, free services and discounted products and 

services) to induce facilities to purchase or continue purchasing products and services 

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reimbursed through Medicare and Medicaid. In so doing, Omnicare violated Federal and State 

Anti-Kickback Statutes (“AKS”). (Compl. ¶ 5).

In seeking reimbursement from Medicaid, Omnicare was required to and did certify that 

it complied with all AKS, on each claim submitted. Each such certification was false, and 

therefore each claim submitted to Medicaid was false, because Omnicare in fact was in violation 

of the AKS at the time of each relevant claim. As a result, Omnicare received millions of dollars 

in payments from federal and state funds to which it was not entitled. (Compl. ¶ 6).

Omnicare’s largest, most profitable business is providing prescription medications. 

However, Omnicare also provides a wide array of pharmaceutical and other services. For 

example, Omnicare’s Consulting Pharmacists provide facilities with direction and oversight on 

all aspects of the acquisition, disposition, handling, storage and administration of prescription 

medications and devices in the facilities. Consulting Pharmacists also review medical charts and 

provide comments and input to nurses or prescribing physicians. (Compl. 25-29).

Omnicare also provides Consulting Nurses who perform a value added services

including: reviewing, cleaning and organizing medication carts; ensuring that all medications 

needed are ordered and present prior to distribution; and participating in administering 

medications to patients. Omnicare provides services including: drug therapy management; unitof-use medication delivery systems; customer service professionals for rapid response and 

emergency service; customized quality assurance, developed by teams of regulatory experts; and 

compliance assistance with state and federal regulations. Finally, Omnicare provides facilities

with over-the-counter (“OTC”) medications and other non-prescription products they are 

required to maintain, but that are not reimbursed by Medicare. Omnicare charges its nursing 

facility clients directly for these medications and products. (Compl. ¶ 30-32).

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In order to secure a continuing and lucrative stream of prescription medication business, 

Omnicare has developed and implemented the following inducement schemes. 

Forgiveness of Accounts Receivable - (“A/R Conduct”)

Although Omnicare bills facilities on a monthly basis, as early as January of 2009 

Omnicare, at the direction of its Regional Vice President of Pharmacy Services for the Illinois 

Region, A. Samuel Enloe (“Enloe”), engaged in a pattern and practice of agreeing to forego 

payment of those bills for many of its clients, in exchange for and as an inducement for the 

facilities to continue purchasing purchase lucrative prescription medications from Omnicare. As 

a result, Omnicare permitted many nursing facilities with which it does business in Illinois to 

amass substantial accounts receivables, often comprised in large part or entirely of charges for 

pharmaceutical services and non-prescription products. (Compl. ¶ 36-48).

Improper Discounts for Pharmaceutical Services - (“Discounts Conduct”)

In October 2009, pursuant to a Consent Decree with the U.S. Department of Justice, 

Omnicare entered into an Amended and Restated Corporate Integrity Agreement (“CIA”) with 

the Department of Justice. The CIA set forth a variety of required compliance measures and best 

practices. Pursuant to this, a policy was implemented whereby Omnicare would charge a fee for 

pharmaceutical services that reflected the real value of those services. Rather than implement 

this policy with regard to favored clients in Illinois, Enloe agreed to provide improper discounts 

for those services, as an inducement to keep key customers. (Compl. ¶ 49-58).

Improper Refunds and “Credits” – (“Refunds/Credits Conduct”)

In a number of instances, Omnicare learned that certain facilities were threatening to 

terminate their relationships, or were being solicited by competitors. In response, Omnicare 

contacted those clients and claimed it had conducted a review of its prior billing records, 

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determined it had overcharged the clients by various amounts (in some cases ranging from

$60,000 to $300,000) and offered the clients a “credit” of those amounts. There was in fact no 

legitimate accounting basis for these “credits.” Rather they were trumped up, based on fear of 

losing customers, and offered as inducement to prevent an expected loss of business. (Compl. ¶ 

59-74). 

Discounts and Subsidies for Third Party Services – (“SigmaCare Conduct”)

In or around March 2009, Omnicare entered into a financial arrangement with 

SigmaCare, an electronic medical records management company, in which Omnicare would sell 

SigmaCare services and programs to facilities. For at least the period of October 2009 through 

December 2011, Omnicare promoted and sold SigmaCare products and services to facilities 

throughout Illinois, on numerous occasions offering SigmaCare at a substantial discount from 

regular prices to any facility that agreed enter into a fixed, multi-year agreement with Omnicare

for the provision of medications and services. This resulted in Omnicare either receiving a lower 

commission from SigmaCare, or Omnicare directly paying some of the cost for the SigmaCare 

services and programs. Omnicare offered these discounts and payments to the facilities to enter 

into long-term agreements for the provision of pharmaceutical products and services. Omnicare 

made the determination that the direct or indirect costs of the discounts and/or payments were an 

acceptable sacrifice to ensure a continuing and extremely lucrative stream of prescription drug 

business in Illinois. (Compl. ¶ 75-78).

Free Consulting Services and Other Services – (“Free Services Conduct”)

In November 2010, Omnicare instituted a policy to charge $65 per hour for pharmacy 

and other consulting services that it provided to nursing facilities. Enloe complained to officers 

at Omnicare’s corporate headquarters that this policy placed him at a competitive disadvantage 

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in the Illinois region. Enloe then persuaded those officers to change the policy so that Omnicare 

would only charge this fee for services that were mandated by regulation. Any and all other 

consulting and advisory services that Omnicare provided to nursing facilities would be provided 

for free. Omnicare provided these services to clients for free to induce them to continue their 

business relationships with Omnicare and continuing to directly or indirectly purchase 

prescription medications from Omnicare. In doing so, Omnicare made the determination that the 

additional costs incurred are an acceptable sacrifice to ensure a continuing and extremely 

lucrative stream of prescription drug business in Illinois. (Compl. ¶ 79-83).

Omnicare Foundation – (“Omnicare Foundation Conduct”)

For over twelve years, Omnicare operated the Omnicare Foundation, which was 

ostensibly formed as a charitable organization. In Illinois, the Foundation was administered by 

Vernon Gideon, a registered pharmacist for Omnicare of Northern Illinois. Gideon operated 

under the direction and instructions of Enloe. Various clients of Omnicare asked Enloe to have 

the Foundation make payments on the clients’ behalf to various organizations or entities. Enloe 

mischaracterized these payments as charitable contributions, when in many instances they were

actually indirect payments to the owners of the nursing facilities. (Compl. ¶ 84-87).

II. Summary Of The Argument

Based on the foregoing, Relator alleges Omnicare engaged in unlawful inducements to 

facilities, to secure business that was reimbursable from the state and federal governments, all in 

violation of the AKS. Because it submitted claims for payment to government sources on a near 

daily basis, each time falsely certifying that it was in compliance with the AKS, each of those 

claims constituted a false claim under the FCA and related state statutes.

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Omnicare has moved to dismiss the Complaint. Omnicare argues the claim based on A/R 

Conduct is barred by the first-to-file rule, because a case filed in Texas before the present case 

also made allegations related to forgiveness of certain accounts receivable. Actually, the 

allegations as to the A/R Conduct here are not barred because they are materially different in 

critical respects from those in the Texas case, and Relator places the government on notice of 

new and importantly distinct types of fraud, which the Texas case failed to do. 

Next, Omnicare argues that the claim based on Discounts Conduct is barred under the 

public disclosure rule, because Omnicare received a subpoena before this case was filed, asking 

for documents relating to the pricing of pharmaceutical services, and because a long terminated 

case in another state addressed issues relating to discounts for pharmaceutical services. The 

allegations of the Discounts Conduct are not barred because the subpoena did not disclose or 

substantiate that the government was aware of any fraudulent scheme, there is no indication that 

Omnicare produced any documents in response to that subpoena that showed a fraudulent 

scheme; therefore, the subpoena was insufficient to qualify as a public disclosure. Moreover, the 

prior case was terminated years before this action was filed, and therefore presents no bar. 

Finally, the public disclosure bar could not apply in any event because Relator is an original 

source of the allegations in this case.

Omnicare next argues the Complaint falls short under Rule 12(b)(6) because it fails to 

allege knowledge by Omnicare, and fails to allege that any products or services were offered at 

below fair market value. In this regard, Relator has adequately alleged that Omnicare acted 

knowingly because it carefully evaluated its business and its risk of losing business, developed 

schemes designed to induce continued business and knowingly made the determination that 

sacrificing certain payments in inducement was worth the cost in order to secure a much larger 

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stream of income from the highly profitable prescription medication business. (Compl. ¶ 48, 58, 

74, 78, 83 and 87). Relator also alleges the inducements were unlawful because the facts and 

reasonable inferences demonstrate all of the products and services offered were below fair 

market value.

Finally, Omnicare argues that the Complaint fails to comply with Rule 9(b). This 

argument fails because Relator has adequately pled sufficient detail as to the fraudulent schemes, 

the ways in which they were carried out, the ways in which those schemes violated the AKS, and 

the ways in which those violations resulted in submission of false claims.

III. The A/R Conduct Claim Is Not Barred By Ruscher Under The First-To-File Rule 

Because The Material Facts Here Differ Substantively In Nature And Scope.

Omnicare argues this Court lacks subject jurisdiction over the allegations related to the 

A/R Conduct under 31 U.S.C. § 3730(b)(5), and 740 ILCS 175/4(b)(5), the “first-to-file” bar. 

These statutes provide that prior pending actions will bar later filed “related” actions “based on 

the facts underlying the [already] pending action.” The rationale for qui tam suits in general is to 

provide an incentive to private litigants to assist the government in uncovering fraudulent 

activity. U.S. ex rel. Chovanec v. Apria Healthcare Grp., Inc., 606 F.3d 361, 364 (7th Cir. 2010). 

The rationale underlying the first-to-file bar, in turn, is that there is no need to provide that 

incentive in a later case when the government was already alerted to the alleged fraud from 

allegations in an earlier case. Id. 

Omnicare contends the allegations here are subsumed in the earlier filed case of U.S. ex 

rel. Ruscher v. Omnicare, No. 4:08-cv-03396. However, the Seventh Circuit explained that only 

those later filed actions based on the same “material facts” or the same “essential facts” from the 

earlier action are barred. Chovanec, 600 F.3d at 363. Therefore, to determine whether this bar 

applies, the Court must conduct a “claim by claim analysis,” U.S. ex rel. Merena v. SmithKline 

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Beecham Corp., 205 F.3d 97, 102 (3rd Cir. 2000), and “compare the facts underlying the two 

cases.” U.S. ex rel. Batty v. Amerigroup Illinois, Inc., 528 F. Supp. 2d 861, 873 (N.D. Ill. 2007). 

Here, that analysis demonstrates the A/R Conduct is not based on the same material or essential 

facts in Ruscher. Rather, the core factual allegations in the two cases are materially different and 

in certain instances mutually exclusive.

A. Ruscher Involves Collections From A Materially Different Group Of Nursing 

Facilities.

The relator in Ruscher alleged that during the time period at issue in that case, there were 

three types of accounts at Omnicare. The first category is “National Accounts,” those with 

“multiple locations in multiple states.” (Def. Exh. B, ¶ 591). There were forty such National 

Accounts as explained in Ruscher. Id. Debts on these National Accounts were allegedly 

managed by senior executive management at the national headquarters. Id. The second category 

is “Pharmacy Hold Accounts” or “P-Hold Accounts,” which had collection holds placed on them 

by corporate management, and those holds were usually permanent. (Def. Exh. B, ¶ 592). The 

third category is all other accounts, which the relator in Ruscher mistakenly believed were 

subject to rigorous collection efforts. (Def. Exh. B, ¶ 594). In Ruscher, the material or essential

facts are that Omnicare was forgoing collection of accounts receivable mainly for National 

Accounts and sometimes also for P-Hold Accounts.

By contrast, Relator in the present case has discovered that Omnicare management in 

Illinois was engaging in its own scheme to forgo collection of accounts from facilities in Illinois, 

or in a small number of limited instances in adjacent states, that did not fall into either of those 

categories. Attached to this brief as Exhibit A is a list of the facilities referred to in the 

Complaint. (Rel Exh. 1). The facilities at issue in the A/R Conduct were Clients A-E (Petersen 

Health Care, Platinum Health Care, Extended Care Clinical, LLC, Asta Care Centers of Illinois, 

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and Meadowbrook Manor Nursing and Rehabilitation). (Compl. ¶ 36-48; Rel Exh. 1). None of 

those facilities were National Accounts or P-Hold Accounts, and none of them are mentioned or 

implicated in Ruscher. The allegations regarding this conduct thus do not in any way overlap 

with the allegations in Ruscher. Rather, the allegations here involve a localized scheme in 

Illinois, which Ruscher does nothing to reveal or disclose to the government. Not only does 

Ruscher fail to alert the government to alleged fraud relating to the type of accounts at issue in 

the present case, it actually throws the government off the track by alleging that such accounts 

were “subject to vigorous collection efforts.” (Def. Exh. B, ¶ 594). In fact, in the case of this 

localized scheme, driven by Enloe, that was not the case at all.

B. The Scheme In Ruscher Did Not Allege Any Conduct Related To Or 

Overlapping With The Scheme In Illinois.

Next, Ruscher alleges the scheme at issue there was developed and implemented 

primarily at a national level, from senior executive management in the company headquarters. 

(See e.g., Def. Exh B, ¶ 591, 605). The only regional office Ruscher refers to is an office in New

York. (Def. Exh. B, ¶ 611). There is no mention of any A/R Conduct in Illinois, let alone the 

specific scheme developed and implemented here by Enloe. The Seventh Circuit has specifically 

explained that there is a material difference in facts between a scheme orchestrated at a national 

level, and one instituted by an individual in a particular regional office. Chovanec, 600 F.3d at 

364) (“[T]o understand whether the suits materially overlap we must know whether the initial 

suits alleged frauds by rogue personnel at scattered offices or instead alleged a scheme 

orchestrated by [the company’s ] national management.”). Nothing about the allegations in 

Ruscher could reasonably have put the government on notice of the scheme developed and 

orchestrated by Enloe in Illinois, because there is no mention or reference to the Illinois scheme 

in the Ruscher complaint.

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C. The Scheme In The Present Case Involves Forgiveness Of Debts For 

Products And Services That Are Not At Issue In Ruscher. 

The allegations in Ruscher are that, under Omnicare’s scheme, the company refrained

from collecting amounts owed by the facilities for Medicare Part A reimbursement. (Def. Exh. 

B, ¶ 575, 585-86, 595). In the present case, however, Relator also alleges that Omnicare’s 

forgiveness of accounts receivable included charges for “Pharmaceutical Services,” and overthe-counter medications, which was not alleged in Ruscher. (Compl. ¶ 33-34 and 37). As such, 

Ruscher could not have placed the government on notice of those allegations. 

Because there are distinct and material facts in the present case that are not part of the 

Ruscher case, the two cases cannot be deemed “related” for purposes of the first-to-file bar. U.S. 

ex rel. McLain v. Fluor Enterprises, Inc., 2013 WL 4721365, * 7 (E.D. La. Sept. 3, 2013) (a 

subsequent case alleging only “more details regarding the exact same fraudulent conduct” will be 

barred, but if it alleges “conduct distinct from the [earlier case]” it is not barred, even if there are 

some overlapping allegations). The purpose behind to the first-to-file bar is to preclude “me too” 

suits that “do no more than remind the United States of what it has learned from the initial suit,” 

“without revealing anything new.” Chovanec, 600 F.3d at 364. The Relator here identified and 

disclosed a particular scheme to defraud, that was developed and initially implemented by a 

regional actor, Enloe, with regard to a specific set of facilities in the Illinois area, related to 

forgiveness of accounts receivable including charges for Pharmaceutical Services and OTC 

medications. Ruscher does not discuss or disclose any part of this scheme. 

As a result, the present case is not simply a tag-along case that presents mere variations 

of the earlier allegations. Rather, it presents new and different allegations of a scheme that was 

previously unknown and undisclosed to the government. Therefore, this Court has jurisdiction 

over the allegations related to the A/R Conduct.

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D. Ruscher Cannot Trigger The First-To-File Bar Because Omnicare Concedes 

The Allegations In That Case Are Insufficient.

Courts routinely hold that if the allegations in an earlier filed suit are deficient under 

federal pleading standards, they cannot trigger the first-to-file rule. The reasoning is that 

deficient allegations are insufficient to provide adequate notice of the fraud. See U.S. ex rel.

Walburn v. Lockheed Martin Corp., 431 F.3d 966, 973 (6th Cir. 2006) (“complaint that is 

insufficient under Rule 9(b) is dismissed precisely because it fails to provide adequate notice to 

the defendant of the fraud it alleges”). Id.; see also Campbell v. Redding Med. Ctr., 421 F.3d 

817 (9th Cir. 2005) (complaint over which federal court lacks subject matter jurisdiction is no bar 

to subsequent complaint); U.S. ex rel. Bledsoe v. Community Health Sys., 342 F.3d 634, 643 (6th

Cir. 2003). As the Sixth Circuit explained, a “complaint that fails to provide adequate notice to a 

defendant can hardly be said to have given the government notice of the essential facts of a 

fraudulent scheme, and therefore would not enable the government to uncover related frauds.” 

Walburn, 431 F.3d at 973.

Notably, Omnicare moved to dismiss in Ruscher, in part because it fails to adequately 

plead a claim for fraud under Rule 9(b). (See Rel Exh. 2) (Ruscher, Dkt. No, 120). Although the 

court there has not dismissed that case, as occurred in Walburn for example, Omnicare’s motion 

presents a clear concession that the allegations in Ruscher are insufficient to place it on notice of 

the alleged fraud. If the allegations in Ruscher are not sufficient to apprise Omnicare of the 

nature of the fraud, they cannot adequately provide notice to the government either.1 At a 

 

1 Relator acknowledges one other court held a failure to comply with 9(b) does not necessarily preclude a prior case 

from triggering the first-to-file bar because 9(b) serves many purposes, not just providing adequate notice. U.S. ex 

rel. Batiste v. SLM Corp., 740 F. Supp. 2d 98, 104 (D.D.C. 2010) aff'd, 659 F.3d 1204 (D.C. Cir. 2011). However, 

Omnicare clearly seeks dismissal in Ruscher because the complaint makes only “conclusory and generalized 

allegations.” (Ruscher, Dkt. No. 120, p. 24). Therefore, Omnicare is invoking Rule 9(b) to attack the lack of 

adequate notice, not for any other ancillary purpose under the Rule. Omnicare is conceding the allegations in 

Ruscher are insufficiently pled; therefore, they cannot have provided adequate notice of the fraud. 

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minimum, it would be premature to dismiss the present case based on Ruscher, when that case 

may be dismissed for failure to adequately plead. 

IV. The Discounts Conduct Is Not Barred Because The Subpoena For Documents Does 

Not Constitute A Public Disclosure And Relator Is An Original Source.

Omnicare’s next jurisdictional argument concerns Relator’s allegations that Omnicare

provided improper discounts for pharmaceutical services to various facilities (“Discounts 

Conduct”). Omnicare argues there was a “public disclosure” of this fraudulent scheme 

evidenced by a Department of Justice subpoena issued to Omnicare on March 1, 2011, seeking a 

broad away of documents on a number of subjects, including in part, documents relating to 

pricing for pharmaceutical services. (See Def. Exh. D). In other words, from a single subpoena 

seeking documents, Omnicare leaps to the conclusion that: 1) there was a fraudulent scheme, 2) 

the government was aware of the fraudulent scheme, and 3) there was a “public disclosure” of 

that scheme that bars Relator’s allegations. As a result, Omnicare contends these allegations are 

barred under 31 U.S.C. § 3730(e)(4), the public disclosure bar.

Omnicare cites to only one case as authority for its proposition that the mere issuance of a 

subpoena by the government demonstrates public disclosure: Glaser v. Wound Care 

Consultants, Inc. 570 F.3d 907, 913-914 (7th Cir. 2009). Omnicare significantly overstates the 

very limited and fact-specific holding in Glaser. In that case, the government had not merely 

sent a request for documents. Rather, the Center for Medicare and Medicaid Services (“CMS”) 

actually sent a letter revealing it was investigating fraudulent billing practices and “demanding 

repayment for Wound Care’s improper use of [a doctor’s] billing code.” Glaser, 570 F.3d at 

913. The Glaser court explained that the public disclosure requirement is satisfied when the 

agency charged with enforcement has “‘issued [documents] containing information that 

substantiates an allegation of fraud.’” Glaser, 570 F.3d at 914 (quoting U.S. ex rel. Feingold v. 

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AdminaStar Fed., Inc., 324 F.3d 492, 496 (7th Cir. 2003)) (emphasis added). In Glaser, the 

government actually commenced a fraud investigation “designed to recover money Wound Care 

should not have received.” Glaser, 570 F.3d at 914. The fact that CMS was actually seeking 

repayment of funds obtained by the fraudulent scheme “substantiated” the allegation of fraud, by 

demonstrating there was already a basis to believe the fraud had occurred. Id. 

In the present case, by contrast, the subpoena does not even suggest the government was 

actually demanding the repayment of any funds unlawfully obtained, let alone substantiate an 

allegation of a fraudulent scheme. It was merely a request for documents, nothing more. It 

therefore differs in substance and effect from the demand for repayment in Glaser. 

Moreover, Omnicare does not allege it actually complied with the Subpoena or produced 

any documents, let alone documents that would have alerted the government to the fraudulent 

scheme alleged by Relator. Instead, Omnicare makes the remarkably self-serving claim that 

Relator does not “allege any information that would not have been included in Omnicare’s 

response to the subpoena.” (Def. Mot., p. 13). In this regard, Omnicare has it backwards. 

Relator need not demonstrate his allegations contain information not distinct from what 

Omnicare may or may not have produced in to the subpoena (if there was any). Rather, 

Omnicare, as the only party that knows what, if any, documents were produced, must support its 

argument by demonstrating that its response disclosed the same scheme alleged here. It is 

holding those documents behind its back, and faulting Relator for not demonstrating how his 

allegations differ from information in those (possibly non-existent) documents.

Several courts have held that a mere subpoena for documents does not suffice as a public 

disclosure; rather, a defendant must demonstrate documents were actually produced in response, 

and that those documents disclose the same information alleged in the qui tam case, or that the 

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subpoena itself contained allegations of fraud. See e.g., U.S. ex rel. Fowler v. Caremark RX, 

L.L.C., 496 F.3d 730, 736 (7th Cir. 2007) (overruled on other grounds, Glaser, 570 F.3d 907) 

(allegations barred by public disclosure because Omnicare had produced over 11,000 pages of 

documents to the government relating to the allegations constituted a public disclosure); U.S. ex 

rel. Saldivar v. Fresenius Med. Care Holdings, Inc., 906 F. Supp. 2d 1264, 1274 (N.D. Ga. 2012)

(subpoena did not constitute public disclosure because it contained no allegations of fraud); and 

U.S. ex rel. Schubert v. All Children's Health Sys., Inc., 2013 WL 1749861, *3 (M.D. Fla. Jan. 8, 

2013) (finding a public disclosure only because there had been production of documents 

pursuant to the subpoena, and those documents contained much of the information alleged in the 

fraudulent scheme). Because there is no indication in the subpoena that the government was 

already aware of a fraudulent scheme, or that documents produced in response to the subpoena 

disclose the fraudulent scheme alleged here, the subpoena itself is not sufficient to constitute a 

public disclosure and bar the claim here.

Omnicare also argues the Discounts Conduct claim should be barred because it is similar 

to the allegations in the case of U.S. ex rel. Maguire v. Omnicare, Inc., No. 02-cv-11436 (D. 

Mass.) Omnicare cites no authority for this proposition. Rather, this seems to be an attempt to 

bootstrap the first-to-file bar (pending case with the same allegations) into the confines of the 

public disclosure bar. The fatal flaw there is that Maguire had been settled and terminated over 

two years before the present case was filed. (Rel Exh. 3) (Maguire, Dkt. No. 49).

A suit that has already been dismissed or settled, and is therefore no longer pending when 

a subsequent suit is filed, does not bar the later suit. “In essence, the first to file bar precludes 

claims arising from events that are already the subject of an existing qui tam suit.” U.S. ex rel. 

Batty v. Amerigroup Illinois, Inc., 528 F.Supp.2d 861, 872 (N.D. Ill. 2007) (emphasis added). 

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The first-to-file bar “prohibits private relators from bringing a related action based on the facts 

underlying a pending qui tam case.” U.S. ex rel. Grynberg v. Koch Gateway Pipeline Co., 390 

F.3d 1276, 1277 (10th Cir. 2004) (emphasis added). “[T]he ultimate fate of an earlier-filed action 

does not determine whether it bars a later action under § 3730(b)(5); rather the question is only 

whether the earlier action was ‘pending’ at the time the later action was filed.” U.S. ex rel. 

Walburn v. Lockheed Martin Corp., 431 F.3d 966, 972 n.5 (6th Cir. 2005) (emphasis added). The 

Maguire suit was long over when this action was filed. Relator alleges that a scheme to defraud 

was occurring in Illinois long after Maguire was settled, and long after this type of conduct had 

supposedly been corrected, which is information that had never been publicly disclosed. 

Relator’s allegations serve the valuable purpose of alerting the government to the fact that a kind 

of fraudulent scheme that was supposed to have been cured, was actually being reborn in a new 

region, by new players. In sum, neither the subpoena for documents nor the previously 

terminated Maguire suit constitutes a public disclosure that could in any way bar Relator from 

pursuing this action.

Even if there had been a public disclosure, Relator still could pursue this action because 

he is an “original source” of the information. 31 U.S.C. § 3730(e)(4)(A)(iii). An original source 

is one who “has knowledge that is independent of and materially adds to the publicly disclosed 

allegations or transactions, and who has voluntarily provided the information to the Government 

before filing an action under this section.” 31 U.S.C.A. § 3730(e)(4)(B). Relator voluntarily 

provided the information in the Complaint to both the U.S. Attorney and the Illinois Attorney 

General prior to filing this action. That is not set forth in the Complaint because it was a 

confidential communication between Relator and those government officials at the time. 

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In addition, Relator has independent knowledge because he learned of the information 

independently of the Maguire case or the subpoena (even if those were public disclosures). U.S. 

ex rel. Howard v. Urban Inv. Trust, Inc., 2009 WL 2252252, *4 (N.D. Ill. Jul. 29, 2009). He was 

directly involved in interfacing with the facilities at issue, and working with their personnel 

closely on a regular basis. He knew exactly what services were being provided to those 

facilities, because he was responsible for ensuring that the services were adequate to meet the 

needs of the facilities. He had direct knowledge of what was being charged to the facilities. In 

addition, he had over 30 years of experience in the field in both private industry and regulatory 

capacities and knew what constituted fair value for services of that nature, and therefore knew 

independently that the facilities were being charged far below a fair value.2 

V. Relator’s Complaint Satisfies The Pleading Requirements Of Rule 12(b)(6).

Omnicare’s next line of attack is that Relator fails to plead violations of the AKS

sufficiently under Rule 12(b)(6). The elements at issue are that Omnicare (1) knowingly and 

willfully (2) paid or offered to pay (3) remuneration (4) to induce another party to purchase or 

order any item or service for which payment can be made under a federal health program. 42 

U.S.C. § 1320a-7b(b). When evaluating a motion to dismiss under Rule 12(b)(6), the Court not 

only “takes as true all factual allegations in Plaintiff's complaint,” but also “draws all reasonable 

inferences in its favor.” U.S. ex rel. Munoz v. Computer Sys. Inst., Inc., 2013 WL 5781810, *3 

(N.D. Ill. Oct. 25, 2013).

 

2 Even though these particular facts may not be in the Complaint, Relator is permitted to raise them now to show 

that the Complaint should not be dismissed because they are consistent with the allegations. Reynolds v. CB Sports 

Bar, Inc., 623 F.3d 1143, 1147 (7th Cir. 2010); Highsmith v. Chrysler Credit Corp., 18 F.3d 434, 439-40 (7th Cir. 

1994) (plaintiffs may defend 12(b)(6) motions with additional facts outside of the complaint as long as those facts 

are consistent with the underlying allegations). Relator alleged that he has “direct, personal, and independent 

knowledge of the facts underlying the allegations of this Complaint,” that he is the original source of information, 

and that he has knowledge of the false claims. (Compl. ¶ 13-15). These additional facts are consistent with those 

existing allegations and therefore permissible in defending this Motion.

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A. Relator Adequately Pleads Knowing Violations.

Initially, Omnicare refers to the obligation to plead that the violations at issue were done 

knowingly. Omnicare never definitively claims that the allegations were insufficient on this 

issue, but simply repeats the requirement and cites to numerous cases setting forth the core 

elements of a claim. To the extent Omnicare is alleging that Relator inadequately pled 

knowledge, the argument must fail. When pleading a complaint under the FCA based on 

violations of the AKS, it is sufficient to plead knowledge generally. Munoz, 2013 WL 5781810 

at * 4. Here, Relator has pled ample facts demonstrating that Omnicare knowingly set upon a 

course to develop and implement several fraudulent schemes for the purpose of inducing 

continued business from facilities (some of whom threatened to terminate their relationships). 

Relator explained that overwhelmingly the most lucrative portion of Omnicare’s business is the 

sale of prescription medications. (Compl. ¶ 25). The profit margins from those sales far exceed 

that from other aspects of the business. (Compl. ¶ 34). As a result, it is critical to Omnicare to 

build and to retain sources of that highly profitable revenue from nursing facilities. Omnicare

knowingly and intentionally made the determination that it was in its best interest to offer these 

unlawful inducements (i.e., forego a relatively small level of compensation) in order to 

intentionally induce the facilities to do business or retain their business for the lucrative 

prescription medication reimbursements. (Compl. ¶ 48, 58, 74, 78, 83, 87, 109, 119).

B. The Allegations, Reasonable Inferences And Further Consistent Facts Are 

Sufficient To Demonstrate Omnicare Offered Products And Services At 

Below Fair Market Value Which Constitutes Unlawful Remuneration. 

For each of the fraudulent schemes at issue, in which Omnicare provided or offered items 

or services of value in exchange for continued business, Omnicare argues that there is not 

enough specificity in the Complaint to show the remuneration was unlawful, because it is unclear 

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whether the items were provided below fair market value. See U.S. ex rel. Klaczak v. 

Consolidated Med. Transp., 458 F. Supp. 2d 622, 678 (N.D. Ill. 2006). Omnicare stretches the 

pleading requirements too far. Relator need not prove lack of fair market value at this stage. 

Moreover, the facts alleged and the reasonable inferences drawn from them demonstrate 

unlawful remuneration.

One of the overriding themes in Omnicare’s argument is that Relator (whom Omnicare

discounts as a lowly customer service representative) could not possibly have had knowledge of 

any of these fraudulent schemes or the unlawful nature of any remuneration. On the contrary, 

Relator’s job responsibilities required him to interact directly with key management of the 

facilities he oversaw. He had been in this business for thirty years, both in private industry and 

in regulatory capacities. He knew the management of facilities not only from his work with 

Omnicare, but in many cases through his past work in the regulatory field as well. He was 

intimately familiar with the facilities he oversaw, with their operations, regulatory compliance, 

purchases, the services they obtained, and with the personnel at each facility. He had worked in 

numerous roles in the long-term care industry his entire professional life. He has direct and 

personal knowledge of operations and revenues, of the value of services and products provided, 

all based on his years of working in this industry and seeing it from many different angles. As a 

result, he is more than adequately knowledgeable and his allegations are validly based on his 

own personal experiences and knowledge.

1. A/R Conduct.

Relator alleges Omnicare regularly allowed certain facilities to amass substantial 

accounts receivable (i.e., forgo collection of invoices for various products and services) in order 

to induce the facilities to continue doing business with Omnicare. Omnicare argues the 

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Complaint is deficient because it does not allege that amounts were “actually forgiven” or 

ultimately that Omnicare failed to collect them. Omnicare also claims that Relator could not 

have known about the forgiveness of A/R, because he was aware of only one specific

conversation on this exact topic, and was not involved in collection, so he could not have known 

whether anything was collected. This, however, is a matter of evidence, not pleading. In any 

event, even this one conversation, in which a facility was told it need not worry about paying its 

accounts receivable if it continued to do business with Omnicare, is perhaps as specific and 

direct as any evidence could be of a scheme of unlawful remuneration.

Next, Omnicare claims that because there is no evidence that such accounts were 

ultimately written off, there could not have been any remuneration. Apparently Omnicare thinks 

that matters such as cash flow and the time value of money either do not exist or are irrelevant to 

businesses, particularly nursing facilities that typically operate on the thinnest of profit margins. 

Whether these accounts were allowed to float for a month, a year or a decade, Omnicare was 

conferring value to facilities by allowing them to consistently forgo paying their accounts, and 

instead use that cash flow for other purposes. Moreover, the time value of money alone is 

improper remuneration and inducement. Finally, the Complaint does contain factual allegations 

from which it could reasonably be inferred that these accounts were written off in whole or in 

part. For example, Relator alleges that “Omnicare made the determination that given the 

substantially more profitable prescription component of its business, it is more beneficial and 

profitable to Omnicare to offer this inducement in order to secure a steady continuing stream of 

business for its prescription medications, than to demand payment of these outstanding amounts 

and risk losing a component of its profitable business.” (Compl. ¶ 48).

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2. Discounts Conduct

Relator alleges that pursuant to the Corporate Integrity Agreement (“CIA”), which 

requires certain policies and procedures regarding remuneration and financial arrangements, 

Omnicare instituted policies to charge certain amounts for certain services. Omnicare claims this 

allegation is “demonstrably wrong” because the specific amounts for specific services were not 

set forth in the CIA. But there is no question the CIA mandated certain “policies and 

procedures” be implemented to ensure compliance with the AKS with regard to financial 

arrangements and remuneration. (Def. Exh. A, p. 6-7). Pursuant to that requirement, policies 

were implemented setting forth required fair market value charges for particular services. 

Whether the actual dollar amounts were set forth in the CIA, or were merely instituted pursuant 

to the CIA, is irrelevant. It was clear, and the reasonable inference is clear, that the fair market 

value of certain services to the facilities was far in excess of what Omnicare was then charging, 

and that had to be changed. Despite that, Relator alleges that Omnicare in Illinois refused to 

make those changes for certain selected facilities, or initially made those changes, and then 

relented after pressure from the facilities and went back to charging the discounted amounts. 

(Compl. ¶ 49-58).

3. Refunds and Credits Conduct

Relator alleged with specificity, in some cases to the penny, that Omnicare gave certain 

facilities refunds and credits that were trumped up when those facilities threatened to leave, or if 

there was a fear they would leave. (Compl. ¶ 59-74). Omnicare claims this cannot be unlawful 

remuneration unless Relator has evidence that the facilities were not entitled to the refunds or 

credits. Again, Omnicare blurs the line between pleading and proof. Relator has alleged that 

there was no legitimate accounting basis for awarding these refunds or credits. (Compl. ¶ 61, 64, 

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67, 70, 73). Rather, Omnicare was willing to sacrifice an amount of money to which it was 

legitimately due, and give a manufactured “refund” or “credit,” in order to induce the facility to 

remain a customer. Omnicare cites one case supposedly supporting its argument that lack of 

factual detail about remuneration schemes justifies dismissal. U.S. ex rel. Foster v. BristolMyers Squibb Co., 587 F. Supp. 2d 805, 824 (E.D. Tex. 2008). However, in Foster, the court 

emphasized that the relator provided “not one factual detail or example to support this 

allegation.” In the present case, Relator has provided five specific examples, in some cases 

describing the credit by specific date and exact amount to the penny. These facts and the 

reasonable inferences from them are more than sufficient to allege that there was unlawful 

remuneration. 

4. SigmaCare Conduct

It should go without saying that medical records management is an increasingly time 

consuming process and a costly burden to many nursing facilities, much the way e-discovery is 

in the litigation world. SigmaCare is a highly useful and desired electronic medical records 

management platform, and Relator alleges Omnicare offered this valuable product to favored 

facilities at a sharp discount. (Compl. ¶ 75-78). Without citation to any case law, Omnicare 

argues that these allegations fail because there is no allegation of the fair market value 

benchmark (actual dollar value) for SigmaCare product and no specific allegation of the actual 

percentage discount, so there is no viable allegation of unlawful remuneration. Relator alleges 

that this product was offered at a “substantial discount” off of the “regular price.” The only 

reasonable inference here, is that the regular price, (i.e. a price people would ordinarily pay in 

arms-length transactions) is the fair market value, and the substantial discounts from that price 

constitute unlawful remuneration.

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5. Free Services Conduct

Relator alleges that Omnicare offered substantial ancillary services, and instituted a 

policy of charging $65 per hour for those services, but that Enloe was successful in skirting that, 

and offered these services for free. Omnicare argues that Relator failed to allege the value of the 

services, or why they have to charge for the services at all. First, Relator did allege the value of 

these services, not a value he made up, but the value Omnicare itself placed on these services: 

$65 per hour. Relator then alleges that in Illinois, Omnicare was able to get around that and offer 

these services for free. Omnicare apparently believes that it should be able to offer services 

valued at thousands of dollars per month for free, and that is has no obligation to charge for 

items of value provided as an inducement to facilities. The AKS, however, say differently. 

Omnicare’s position that it does not have to charge specifically for services that are built into 

other charges is an issue for a jury to decide, not for Omnicare to decree by fiat at the pleading 

stage to avoid ever having to answer for its actions. Relator will be able to prove (though he is 

not required to do so at this stage) from his vast experience, that these services have 

demonstrable value to these facilities, and without receiving them from Omnicare for free, they 

would have to procure them through consultants at substantial cost. That is how the provision of 

these services constitutes unlawful remuneration.

6. Omnicare Foundation Conduct

Here, Relator alleges that Omnicare used its Foundation to funnel so called charitable 

contributions to causes or expenses of clients from favored facilities. Omnicare claims these 

allegations fail because there is no allegation of an agreement as to an illicit purpose for the 

donations. This simply ignores the pleadings. Not only was there an express understanding, but 

Relator alleges that certain facility owners actually reached out to Enloe and specifically 

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requested that he funnel donations to them. (Compl. ¶ 85) (“During the last six years, various 

nursing facility clients of Omnicare have asked Enloe to have the Foundation make payments on 

the clients’ behalf to various organizations or entities.”) More than just an understanding of an 

illicit purpose, it was a direct and explicit quid pro quo request, in order to keep securing further 

business from these favored clients.

VI. Relator’s Complaint Satisfies the Pleading Requirements Of Rule 9(b).

A. Specific Allegations of Submission of False Claims

Omnicare argues for dismissal because Relator did not give specific examples of actual 

false claims submitted, the date of the claim, who submitted it, the amount of the claim, where 

the claim was submitted from and to whom. In the context of a scheme involve reimbursements 

under Medicare and Medicaid, like the present case, that argument has been expressly rejected. 

U.S. ex rel. Geschrey v. Generations Healthcare, LLC, 922 F. Supp. 2d 695, 705 (N.D. Ill. 

2012). In Gerschrey, the Court explained as follows:

Despite Relators’ lack of specific knowledge about billings submitted to the 

government, the fact that most of Generations’ patients were receiving 

government benefits and Generations billed Medicare and Medicaid at a per diem

rate for each covered patient creates a strong inference that bills for the care of 

patients as to whom fraud has been alleged were submitted to the government. . . .

Relators do not specify in each example whether Generations billed Medicaid, 

Medicare, or both. Even so, the facts as pleaded support the inference that claims 

based on fraudulent misrepresentations were submitted to one or both of the 

government programs. Although there is a slim possibility that the alleged fraud 

might have been committed only in connection with Generations’ “very few” 

patients with private insurance, at the pleading stage, Relators need not exclude 

all possibility of honesty.

Geschrey, 922 F. Supp. 2d at 705. Omnicare also argues that allegations based on information 

and belief are inadequate to comply with Rule 9(b).

Here, Relator sets forth the claims and payments in strong detail in over sixteen 

paragraphs (Compl. ¶ 88-104), and only pleads on information and belief as to one of those 

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allegations (Compl. ¶ 99), the rough estimate of the total number of claims. There are no 

allegations on information and belief as to the claim and payments processes overall or the 

specific explanation of the process by which Omnicare submits claims, so that portion of 

Omnicare’s argument is a red herring.

For example, with regard to Medicaid, Relator explains as follows:

95. Omnicare provides services to the State of Illinois on a contractual basis through 

its Medicaid provider licensure program. In the program, Omnicare agreed to provide 

pharmaceuticals to Illinois Medicaid patients in the nursing facilities it serves, and the 

Illinois Department of Healthcare and Family Services the (“IDHFS”) agreed to 

reimburse Omnicare at a statutorily-defined rate, plus a fixed dispensing fee, meant to 

provide Omnicare with a profit.

96. In order to be eligible to receive Medicaid reimbursements, Illinois pharmacies 

(including Omnicare’s dispensing pharmacies) must . . . agree to the following 

provisions stated in the application, entitled "Agreement for Participation in the Illinois 

Medical Assistance Program”:

The Provider agrees, on a continuing basis, to comply with Federal 

standards specified in Title XIX of the Social Security Act, and also with 

all applicable Federal and State law and regulations.

This pledge is renewed each year.

97. Illinois provides reimbursement for Medicaid providers via an electronic or paperbased claims process. The Medicaid claim form . . . contains a mandatory certification 

that the provider has complied with all laws and regulations pertaining to Medicaid, 

including the Federal Anti-Kickback Statute.

98. In Illinois, at least once per day, when each Omnicare facility batches its 

Medicaid claims and submits them electronically to IDHFS, as part of each electronic 

claim, Omnicare affixes its unique Medicaid provider identification number, which 

serves as an electronic stamp indicating that . . . Omnicare is in compliance and has 

complied with all applicable federal and state regulations. Claims are adjudicated 

instantaneously; Omnicare receives reimbursement on a weekly basis from IDHFS for all 

approved claims.

99. Upon information and belief, Omnicare has submitted and continues to submit 

thousands of such claims for pharmaceutical products dispensed to residents of nursing 

facilities in Illinois. These claims are the direct result of the contracts it obtains with the 

help of illegal kickbacks.

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Based on these specific allegations, it would be remarkable for any responsible person at 

Omnicare not to have sufficient notice of the claims at issue based on these allegations. The 

claims were submitted by each Omnicare facility. They were submitted on Medicaid claim 

forms, containing a mandatory certification by Omnicare that it has complied with all AKS. The 

claim form contains a unique Medicaid provider ID number, which constitutes an electronic 

stamp attesting that Omnicare is in compliance with the AKS. That attestation is false each and 

every single time the claim is submitted for the relevant time period because Omnicare was not 

in fact in compliance. The claims are submitted at least once per day. They are mostly 

submitted electronically. The claim is processed automatically, and Omnicare receives payment 

on a weekly basis resulting from these false claims.

Relator has done more than provide specificity as to some or a few false claims. He has 

demonstrated that every day, Omnicare has submitted false claims, and explained how that was 

done, when, where, why and to whom, how and when payment was received and why the claim 

was false. U.S. ex rel. Trombetta v. EMSCO Billing Servs., Inc., 2002 WL 34543515, *4 (N.D. 

Ill. Dec. 5, 2002) (“[relator] has done better than point to a single fraudulent bill—she has 

explained how several specific billing practices led to hundreds of thousands of fraudulent 

bills.”). The Medicare/Medicaid process is not similar to an instance in which a party fails to 

issue a rebate for returned merchandise, or charges the government on an invoice for services 

that were not performed, or a hospital in a particular incident received double payment for one 

service,3or some other more individualized or isolated incident or process. The claims here are 

routinized and highly formulaic, submitted the same way dozens, hundreds or thousands of times 

over. Trombetta, 2002 WL 34543515 at *4 (finding that Rule 9(b) was satisfied as false claims 

when the relator alleged facts as to the “the mechanics of Medicaid and Medicare 

 

3

See U.S. ex rel. Soulias v. Northwestern Univ., 2013 WL 3275839, *4 (N.D. Ill. June 27, 2013).

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reimbursement”). Omnicare seems bent on demanding some form of super-pleading or actually 

demanding the submission of incontestable, admissible evidence to definitively prove a case, 

before it should even have to answer allegations. No court has ever required that.

Rather, courts in this Circuit have recognized “the importance of balancing detail with 

flexibility in applying the Rule 9(b) standard, criticizing courts and litigants that cling too tightly 

to the incantation of ‘who, what, when, where, and how,’ rather than understanding that the 

information required of a plaintiff will differ in each case.” Geschrey, 922 F. Supp. 2d at 705-

06. Here, Relator has pled more than sufficient detail of the false claims. 

B. Specific Allegations As To The Schemes.

“Rule 9(b) does not require a plaintiff to plead evidence and is to be read in conjunction 

with Rule 8, which requires a short and plain statement the claim.” Trombetta, 2002 WL 

34543515 at *3. Where the fraudulent schemes are extensive and occur over a number of years, 

less exacting detail is required. Id. Omnicare begins by arguing the Complaint is deficient 

because the names of the facilities are not identified. That was a measure done for the privacy of 

the case, and is easily remedied by the fact that Relator has now attached and disclosed that 

information. (Rel Exh. 1). In addition, the “who” requirement is designed only to identify which 

defendants were engaged in which schemes, not the identities of counter-parties. Id.; U.S. ex rel. 

Goldberg v. Rush Univ. Med. Ctr., 929 F.Supp. 2d 807, 819-20 (N.D. Ill. 2013) (finding that the 

“who” element was satisfied because the complaint identified which defendants made the false 

statements). Omnicare is the only defendant, and was engaged in each scheme, and in multiple 

instances, Relator went further and identified specific people at Omnicare (e.g., Enloe and 

Patrice Johnson). 

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The remainder of Omnicare’s arguments fall in the nature of demanding hyper-technical 

compliance with the what, when, etc., when courts caution against such rigid adherence to this 

formulation. For example, Omnicare claims the allegations about the Omnicare Foundation 

Conduct are not specific because they do not specify when they occurred. The Complaint is 

clear that the time period at issue for most of the allegations was January 2009 to December 

2011, when the Complaint was filed, and no more than the preceding six years. In Trombetta, 

the time period was identified as 1989-1998 (nine-year period) and the court found that adequate. 

2002 WL 34543515 at *4.

Omnicare also claims the allegations of “where” are inadequate. Omnicare knows the 

location of its offices. It is also clear that all of the facilities at issue are in Illinois. Now that the 

identity of each facility is disclosed, the location of the facilities is at a minimum capable of 

being inferred or publicly available. The “where” element is satisfied when the location from 

which the claims were submitted is known, here the Omnicare offices. Trombetta, 2002 WL 

34543515 at *4.

Next Omnicare argues that the Discounts Conduct fails on the “what” prong, because it 

does not allege what was fraudulent. Providing services at a rate well below their fair market 

value, as determined by the company after reflection and analysis following the CIA, and doing 

so as unlawful remuneration designed to secure or retain business for sales reimbursable by the 

government, is the what. Relator has alleged several specific examples of this practice. Nothing 

more is required. Trombetta, 2002 WL 34543515 at *4 (finding allegations sufficient when 

several particular examples were alleged).

With regard to the Refunds and Credits, Omnicare repeats its allegation from the 12(b)(6) 

argument that there is no allegation that these credits were not earned. The allegation is that 

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there was no legitimate accounting basis for the credits. Relator should not be required to tender 

financial reports showing the metrics and valuations and specific dollar amounts at this pleading 

stage. The reasonable inference is that the credit was trumped up for the purpose of trying to 

sweeten the deal for clients on the edge of departure.

Then, Omnicare demands the exact dollar amount of the SigmaCare discounts. No case 

law supports the notion that actual accounting figures must be part of the allegations. That is an 

item of evidence at trial not a pleading requirement. Omnicare revels in its protected posture of 

being the keeper of these specific details regarding these extensive fraudulent schemes, then 

seeks to knock Relator out at the pleading stage for failing to produce the specific dollar amount. 

Those details can be gathered through discovery, but Omnicare wants there to be no discovery. 

In Omnicare’s pleading world, the complaint is all or nothing. Either the Complaint reveals all 

of the evidence needed to argue to a jury, or it is dismissed. That is a protectively insulating and 

highly desirable pleading standard for defendants, but it is not the law.

VII. Conclusion

The allegations of A/R Conduct are not barred because they are materially different in 

from those in the Ruscher case and place the government on notice of new and importantly 

distinct types of fraud, which Ruscher failed to do. The allegations of the Discounts Conduct are 

not barred because the subpoena at issue does not qualify as a public disclosure, the Maguire

case presents no bar, and the Relator is an original source of the allegations in any event.

Relator has adequately pled the causes of action at issue and pled sufficient detail as to 

the fraudulent schemes, the ways in which they were carried out, the ways in which those 

schemes violated the AKS, and the ways in which those violations resulted in submission of false 

claims. To the extent that any of the allegations do fall short in one way or another, Rule 15 

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allows that amendments should be liberally allowed. See Chovanec, 600 F.3d at 365 (providing 

that a qui tam case should be dismissed without prejudice if the relator can frame amended 

allegations that would withstand a motion to dismiss). 

WHEREFORE, Plaintiffs, the United States of America and the State of Illinois, ex rel. 

Alan J. Litwiller, respectfully request that this Court deny Defendant’s Motion to Dismiss, and 

grant such further and additional relief as this Court deems just. 

Respectfully submitted, 

The United States of America and the 

State of Illinois, ex rel. Alan J. Litwiller

 By: /s/ Kevin J. Clancy_____

One of Relator’s Attorneys

Robert H. Smeltzer

Kevin J. Clancy

Lowis & Gellen LLP

200 West Adams, Suite 1900 

Chicago, Illinois 60606 

(312) 364-2500

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CERTIFICATE OF SERVICE

I hereby certify that on this 18th day of November 2013, I electronically transmitted the 

foregoing document to the Clerk’s Office using the CM/ECF System for filing and transmittal of 

a Notice of Electronic Filing to the following CM/ECF registrants.

/s/ Kevin J. Clancy 

Defendant’s Counsel Plaintiff USA’s Counsel

Denise M. Ware, Esq.

REED SMITH LLP

10 South Wacker Drive

40th Floor

Chicago, Illinois 60606

(312) 207-3880

dware@reedsmith.com

United States Attorney’s Office (NDIL)

219 South Dearborn Street

Suite 500

Chicago, Illinois 60604

USAILN.ECFAUSA@usdoj.gov

Katherine J. Seikaly

Eric A. Dubelier

REED SMITH LLP

1301 K St. NW

Suite 1100 – East Tower

Washington, DC 20005

(202) 414-9219

kseikaly@reedsmith.com

edubelier@reedsmith.com

Case: 1:11-cv-08980 Document #: 36 Filed: 11/18/13 Page 36 of 36 PageID #:517