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Omnicare Securities Litigation Win
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According to Reuters, Omnicare, Inc., a provider of medication, won a dismissal in a securities lawsuit, In Re Omnicare Inc. Securities Litigation, U.S. District Court, Eastern Division of Kentucky, Northern Division, No. 11-cv-173-DLB-CJS.

The long term care pharmacy was sued because its executives allegedly misled shareholders about whether it followed Medicare and Medicaid laws. Defendants in the securities action included former chief executive Joel Gemunder, former chief financial officer David Froesel, former senior vice president Cheryl Hodges and Chief Executive John Workman.

  
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The pharmaceutical services company offers services in several states in the United States. Omnicare supports manufacturers and distributors who care for patients with complex diseases. Omnicare technology solutions shorten training of medical staff, and concentrate on finishing tasks efficiently and safely. For instance, Omnicare Pharmacy is a web-based pharmacy application, which enables fast prescription requests and refills and bill access.

The lawsuit was brought by shareholders who claimed some of the company’s executives falsely alleged Omnicare’s billing followed government requirements, when internal audits discovered defective claims may have requested for reimbursement.

The investor claims arose from misconduct claimed in a whistle-blower case filed by John Stone. In the securities lawsuit, the shareholders did not prove the executives knew of the internal audit findings, they had a duty to disclose the findings, or they knew the compliance statements to the government were not true.

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U.S. District Judge David Bunning in the Eastern District of Kentucky decided the case on March 27, 2013. Because the investors failed to establish the elements for the securities case, they failed to bring “an actionable misrepresentation or omission,” the judge wrote when granting Omnicare’s motion to dismiss, according to Reuters.

The whistleblower Stone was the company’s former internal audit head. An Illinois district court in November 2012 dismissed claims Stone brought against the company under the False Claims Act. The False Claims Act (31 U.S.C. Sections 3729-33) lets a whistleblower, with knowledge of past or present fraud on the federal government, file suit on the government’s behalf to recover civil penalties and damages.



The Illinois court stated the deficient allegations could have been negligence as “actual knowledge, deliberate ignorance or recklessness,” according to Reuters. Bunning stated there was no result from the audit that the company committed fraud relating to Medicare or Medicaid.

The shareholders proposed a class action. The shareholders lost money in Omnicare between 2007 and 2010. Plaintiffs in the securities case included the Jacksonville Police and Fire Pension Fund in Florida and KBC Asset Management.



 

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