Cardinal Health Is Sued by a Whistleblower for Cheating Government Program Intended to Help Small Businesses through “Rent-A-Vet” Scheme

SUWANEE, Ga., Aug. 25, 2020 (GLOBE NEWSWIRE) -- UPPI, a group of small business nuclear pharmacies that specialize in radiopharmaceutical products, has filed a False Claims Act lawsuit against health care giant Cardinal Health, Inc., as well as two of its front companies and their owners, in the United States District Court for the Eastern District of Washington.

The False Claims Act protects taxpayers from unscrupulous contractors by allowing private parties, like UPPI, to sue on behalf of the United States to recover money paid by the Government under fraudulently obtained contracts. The primary Government agency affected by Cardinal’s alleged fraudulent scheme was the United States Department of Veterans Affairs (VA).

Radiopharmaceutical products are used to diagnose and treat medical conditions. The Government buys these products through a competitive contracting process. Contracts ordinarily go to the most competitive bidder, but the Government gives preferential treatment to small businesses—and even more preferential treatment to certain types of small businesses. For VA contracts, small businesses owned by service-disabled veterans (called “Service Disabled Veteran Owned Small Businesses” or “SDVOSBs” in contracting lingo) receive the most preferential treatment of all, and can obtain lucrative contracts without competitive bidding.

UPPI alleges that Cardinal has been hiding behind SDVOSB front companies to unlawfully avoid competitive bidding for Government radiopharmaceutical supply contracts. These front companies could not perform the highly specialized nuclear work required under these contracts. But they bid on the contracts anyway, using their preferred SDVOSB status to win the awards without competition. Once the contracts were awarded to the front companies, Cardinal did almost all the work and received almost all the money from the Government. The front companies kept a share, which was, in essence, a kickback for allowing Cardinal to unfairly bypass its competition. The result is that Cardinal—a health care behemoth—made millions from contracts set aside for small businesses.

Recently, the Government has cracked down on these so-called “rent-a-vet” arrangements, which harm the Government in at least four ways. First, they undermine the integrity of Government programs designed to help disabled veterans. Second, they prevent other small businesses—which could actually have performed the work under the contracts—from obtaining those contracts, undermining the Government’s policy of promoting small business development. Third, they cause the Government to effectively contract with large businesses without the benefit of a competitive bidding process—even though the entity doing the work should only have been able to win contracts through intense competition with all comers. And fourth, they cause the Government to pay money to small-business front companies that it would not otherwise have paid. All of these harms are alleged in this case.

UPPI is a membership organization that promotes the business interests of its approximately sixty-seven members, which are individual, small business, and university-based nuclear pharmacies engaged in the manufacturing, production, marketing, sales, and distribution of nuclear pharmaceuticals.

Cardinal Health, Inc., is a publicly traded multinational health care services company and among the highest revenue generating medical supplies and pharmaceutical distributors in the United States.

For any questions please contact John Witkowski President UPPI at 770-500-6280 or at