The Sept. 3 article Florida receives $300,000 in pharmacy settlement, on the Omnicare settlement funds flowing to Florida to resolve charges of kickbacks to nursing home facilities, sounds like great news. But the payment made to the state is a paltry sum compared to the millions Omnicare will earn in tax deductions on the deal. Omnicare can write off the $16.48 million settlement and shift $5.7 million back onto taxpayers.
The settlement payment is less than it appears. The real after-tax numbers in settlement agreements should be reported. It sends the wrong message to allow businesses to treat these settlements as an “ordinary business expense.”
This is the third time in the past year that Omnicare has settled allegations of illegal kickbacks by paying several millions of dollars. If the payments weren’t tax deductible, or were at least subject to public scrutiny, they would be more effective in deterring bad behavior.
We can all agree that Medicare and Medicaid fraud shouldn’t be a tax write-off. In Florida, Rep. Richard Nugent is a cosponsor of the Truth in Settlements Act, which would bring greater public scrutiny to these deals.
Likewise, Sen. Bill Nelson has co-sponsored the Government Settlement Transparency and Reform Act, which would restrict settlements from becoming tax write offs. Congressional leaders should allow bipartisan bills to address these problems to come to a vote.
Michelle Surka, United States Public Interest Research Group, Boston, Mass.