In United States ex rel. Quinn v. Omnicare, Inc., 382 F.3d 432 (3d Cir. 2004), the Third Circuit affirmed summary judgment in favor of Omnicare and its New Jersey subsidiary (Omnicare) after finding that Omnicare's conduct in connection with its pharmaceutical recycling program did not violate any statute or regulation and, therefore, could not form the basis for liability under the FCA. The relator's inability to present evidence of the submission of an actual claim provided additional basis to affirm summary judgment.

Omnicare sells pharmaceuticals to institutions such as nursing homes. In New Jersey, the majority of these sales are paid for by Medicaid. When pharmaceuticals paid for by New Jersey Medicaid are returned, e.g., because of a change in the patient's prescription, the discharge of the patient from the facility, or the death of the patient, Omnicare refunds 50 percent of the purchase price to New Jersey Medicaid and retains the other 50 percent to cover the costs of processing the returned harmaceuticals. Certain of the returned medication is then recycled and redispensed to, among other patients, Medicaid recipients.

A former employee of one of Omnicare's New Jersey subsidiaries initiated a whistleblower action under the FCA, alleging that Omnicare committed fraud by, among other things, not returning 100 percent of the purchase price to Medicaid for returned and redispensed medication, and dispensing medication that was not packaged in accordance with applicable regulations. On March 28, 2003, the United States District Court for the District of New Jersey granted Omnicare's motion for summary judgment and dismissed the case in its entirety. The court ruled that Omnicare never submitted any "claims" to New Jersey Medicaid that could be considered "false" and that there is no requirement in either federal or state law that a pharmacy refund 100 percent of the price of a returned pharmaceutical.

On appeal, the relator argued that the certification contained within the form submitted for payment (MC-6 Form) — pursuant to which Omnicare expressly certified that the services covered by the claim were in fact provided and that the amount charged was in accordance with Medicaid regulations — was rendered false whenever medication provided pursuant to that claim was subsequently returned because, according to the relator, once medication was returned, the initial claim then became a claim for services that were not provided to the intended beneficiaries. According to the relator, unless the MC-6 Form was adjusted or voided to take into account the subsequent return, the claim became false.

The Third Circuit, in a decision filed on September 1, 2004, disagreed with the relator and concluded that there was no regulatory requirement to adjust or void the MC-6 Form when medication was returned. The court further held that the return of medication did not render the initial claim false because at the time the claims were submitted there was no intentional misrepresentation but rather a request for reimbursement for dispensed medication for which Omnicare was entitled to payment. And, at the time the initial claim was made, there was no way of knowing if any medication would be returned. The court rejected the argument that a claim that was originally valid when submitted could later be rendered false by a subsequent event that itself was not the basis for any required adjustment.

The court also rejected the relator's claim that a subsequent request for payment for recycled and redispensed medication was impermissible double dipping. The court ruled that New Jersey permitted the recycling and redispensing of returned medications without any specific requirement to credit Medicaid.

Finally, the court rejected the relator's claim, based on a theory of implied certification, that Omnicare's recycling process did not comply with the New Jersey Board of Pharmacy Regulations (Pharmacy Regulations) and that Omnicare improperly sought reimbursement from Medicaid for substandard product. The court determined that, although Omnicare may have implicitly certified compliance with the packaging standards contained in the Pharmacy Regulations, the relator's inability to produce evidence of a submitted claim for recycled medication proved fatal to this theory of liability.