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Cardinal Health to Pay $8M to Resolve 'Upfront Discount' Allegations

John Commins, for HealthLeaders Media, April 26, 2011

Cardinal Health Inc. will pay the federal government $8 million to resolve whistleblower claims that it paid kickbacks to pharmacy owners to induce referrals for the distributor's prescription drugs, the Department of Justice said.

The settlement with Dublin, OH-based Cardinal Health resolves a whistleblower False Claims Act lawsuit filed by former pharmacy owner R. Daniel Saleaumua and pharmacy consultant Kevin Rinne.

Saleaumua alleged that Cardinal paid him $440,000 in exchange for an agreement that he purchase from Cardinal prescription drugs for his pharmacies. Saleaumua and Rinne will receive a combined $760,000 as their share of the government's recovery.

"American taxpayers are the victims of illegal kickback schemes that result in Medicare and Medicaid paying millions of dollars more than they should for prescription drugs," said Beth Phillips, U.S. Attorney for the Western District of Missouri, whose office led the investigation. "Today's $8 million settlement underscores our commitment to combating healthcare fraud and protecting taxpayers."

Cardinal Health issued a statement acknowledging the settlement with the federal government, but denied any wrongdoing and referred to the alleged kickbacks as an "upfront discount."

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