Ex-Chief Saleaumua rewarded for whistleblowing

One of the nation’s largest pharmaceutical distributors will to

pay $8 million to settle claims that it violated federal law by

doling out $440,000 to lure business from pharmacies owned by

former Kansas City Chiefs player Dan Saleaumua, prosecutors said


Cardinal Health Inc., which is based in Dublin, Ohio, agreed to

pay the government as part of a lawsuit filed by Saleaumua and

consultant Kevin Rinne, the Department of Justice said. A company

spokeswoman said Cardinal denied wrongdoing but agreed to the

settlement to avoid an expensive legal fight.

Prosecutors said Cardinal, which was the franchisor of

Saleaumua’s seven Medicine Shoppe pharmacies, caused Saleaumua to

accept a deal that he didn’t know was illegal kickback. He and

Rinne will share $760,000 for blowing the whistle on the


“American taxpayers are the victims of illegal kickback schemes

that result in Medicare and Medicaid paying millions of dollars

more than they should for prescription drugs,” said U.S. Attorney

Beth Phillips in Kansas City. “Today’s $8 million settlement

underscores our commitment to combatting health care fraud and

protecting taxpayers.”

Cardinal maintains that the payments weren’t kickbacks and

didn’t increase costs to the government, spokeswoman Corey Kerr

said. Cardinal is the nation’s third-largest distributor of

pharmaceuticals, medical, lab and surgical products.

Saleaumua Inc., the company that owned the Kansas City

pharmacies, was receiving its drugs from distributor McKesson Corp.

when a Cardinal representative contacted Saleaumua in January 2006,

to see if the company was interested in switching distributors,

according to the Justice Department.

As part of the deal, Cardinal said it would give the company,

known as SI, an additional 2.3 percent discount off normal

wholesale prices for the drugs purchased. SI declined because of

possible costs and logistical headaches associated with moving to a

new distributor, prosecutors said.

Soon afterward, Cardinal sweetened its offer to include the 2.3

percent discount and $50,000 in cash to make the switch. After SI

declined again, the offer was raised to $100,000, which SI

tentatively accepted.

When Saleaumua contacted McKesson to inform the company of the

switch, McKesson offered $150,000 to SI to keep its business.

The next day, Cardinal offered $300,000 to switch, then McKesson

offered $400,000. Cardinal countered with $300,000 in cash and

$140,000 toward purchase of Cardinal’s PDX inventory tracking

system. Saleaumua accepted that offer and switched


The government alleges that the kickback skewed the formula used

to determine the amount Saleaumua’s pharmacies received in Medicaid

and Medicare reimbursements, and caused SI to violate the

anti-kickback statute.

But neither Saleaumua nor Rinne, the SI consultant, knew it was

illegal to accept what Cardinal had characterized as an upfront


Kerr, the Cardinal spokeswoman, said her company believes it

would have prevailed in court but wanted to avoid an expensive

legal battle.

“We don’t believe that payment was a kickback,” she said. “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,” she

said. “That $440,000, it’s a payment we believe is legitimate and

legal and complied with applicable law.”

Saleaumua played for the Kansas City Chiefs from 1989 through