Cincinnati-based Omnicare Inc., one of the country's largest providers of pharmaceutical products to nursing homes, is to pay more than $124 million in a settlement with the U.S. Department of Justice for allegedly offering financial incentives to healthcare facilities serving Medicare and Medicaid beneficiaries to choose the company as a drug supplier.

According to a statement published by the Justice Department, improper activity by Omnicare was first uncovered thanks to a whistleblower. Donald Gale, who used to work as a pharmacist for Omnicare, filed the lawsuit in the U.S. District Court in Cleveland, Ohio, in 2010.

Stuart F. Delery, assistant attorney general for the Justice Department's Civil Division, commented that schemes like the one Omnicare was involved in would be punished, as they undermine the U.S. healthcare system and take advantage of vulnerable elderly people at nursing homes. Omnicare had sought to make profit by providing illegal financial benefits to nursing homes and will be held accountable for its actions, Delery added.

Under the terms of the settlement, Omnicare will pay $124.24 million to resolve allegations that the company submitted false claims for reimbursements to Medicare and Medicaid for supplying drugs to nursing homes which had contracts with the two programs. More than $8 million of the sum will be paid to several states that funded the Medicaid programs of which Omnicare took advantage, the statement by the Justice Department said.