$8 Million Settlement for Drug Kickbacks

KANSAS CITY, Mo. (CN) - Cardinal Health, one of the nation's largest drug distributors, will pay $8 million to settle claims that it made kickbacks to lure business from pharmacies owned by a former Kansas City Chiefs player.

Cardinal Health, based in Dublin, Ohio, will pay the government to settle claims filed by former Kansas City Chief Dale Saleaumua and consultant Kevin Rinne, the Justice Department said.

Saleaumua Inc., which owned the Kansas City pharmacies, got its drugs from McKesson Corp. A Cardinal representative approached Saleaumua in January 2006, to see if his company was interested in switching distributors, prosecutors said.

After Saleaumua declined, Cardinal Health sweetened the offer to include a discount on drug products and $100,000. The offer triggered a bidding war for Saleaumua Inc.'s business between Cardinal Health and McKesson, which Cardinal eventually won with an offer to pay Saleaumua Inc. $300,000 in cash and $140,000 toward the purchase of Cardinal's PDX inventory tracking system, prosecutors said.

The government said the kickback skewed the formula that determined how much Saleaumua's pharmacies received in Medicaid and Medicare reimbursements, in violation of the anti-kickback law.

Neither Saleaumua nor Rinne said they knew it was illegal to accept what Cardinal Health characterized as an upfront discount.

Cardinal Health spokesman Corey Kerr said the company admitted no wrongdoing in the settlement. Kerr said the settlement allowed Cardinal to avoid a costly legal battle.

"We don't believe that payment was a kickback," Kerr told The Associated Press. "That transaction didn't result in the government paying more than it was obligated to pay for pharmaceuticals provided by the customer to federal health care program beneficiaries.

"It's an upfront discount to a retail independent customer. That $440,000, it's a payment we believe is legitimate and legal and complied with applicable law."

Saleaumua and Rinne will share $760,000 for blowing the whistle. Saleaumua played for the Kansas City Chiefs from 1989 through 1996.

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