Today I want to write about the people and entities involved in this kickback scheme.
Murray Forman is the principal owner and decision maker for hundreds of nursing homes throughout the country including the Mariner, SavaSeniorCare, GranCare, and THI/Fundamental chains. Leonard Grunstein is a real estate lawyer and partner at Troutman & Sanders. Rubin Schron is an owner of the Woolworth Building.
The Atlanta Journal Constitution had an article about the trio above. Leonard Grunstein is a prominent attorney at Atlanta-based Troutman Sanders named in a federal complaint charging he and several other parties, including two companies with Atlanta ties, were involved in a $50 million kickback scheme to steer nursing home patients to OmniCare. Leonard Grunstein, a New York-based partner at Troutman Sanders and leader of the firm's real estate capitalization and investments practice groups, was named in the complaint. In an e-mail statement, Troutman Sanders spokesman Mark D. Braykovich said Grunstein is taking a leave of absence until the matter is resolved.
Also named is Grunstein's business associates Rubin Schron and Murray Forman, both of New York; Atlanta-based Mariner Health Care Inc. and SavaSeniorCare Administrative Services, which also is headquartered in Atlanta.
According to the detailed 32-page Complaint, Omnicare paid Mariner and Sava $50 million in 2004 to get them to sign long-term pharmacy contracts and steer nursing home patients -- including those covered by Medicare and Medicaid -- back to it for pharmacy dispensing services.
The scheme allegedly worked this way, according to the complaint:
Mariner, one of the nation's largest nursing home operators with more than 263 assisted living facilities, announced in June 2004 it was selling itself to National Senior Care Inc. for $1 billion. National Senior Care, which is headed by Grunstein's brother, Harry, was created solely for that transaction. It is an affiliate of SavaSeniorCare.
Forman and Leonard Grunstein subsequently proposed Omnicare purchase a Mariner subsidiary, Mariner Medical Supply, for $50 million. If Omnicare didn't, it would lose the pharmacy services contract it had with Mariner after the sale to National Health Care.
Omnicare executives raised the concern about such a transaction being perceived as a kickback but agreed to the deal because it risked losing $155 million in revenue and $26 million in operating profit a year on the three years it had left in the contract with Mariner.
Crain's New York Business had an article discussing the complaint and allegations. The Complaint says the above men were part of a trio who received a $50 million payment from Omnicare Inc., the nation's largest nursing home pharmacy, so it could continue to provide services to their nursing home companies, Mariner Health Care and Sava Senior Care. The government alleges the trio attempted to disguise the $50 million from Omnicare as a payment to acquire a business unit from Mariner that in fact only had two employees and was worth far less than $50 million.
The San Jose Mercury News had an article with a great quote from a DOJ official. "Illegal conduct like this can undermine the medical judgments of health care professionals, lead to patients being prescribed medications they do not need, and drive up the costs of health care," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. The agency added that Omnicare specializes in providing drugs to homes caring for dementia and Alzheimer's patients, who have little control over their medications.
