A federal jury has found CVS Health (NYSE: CVS) subsidiary and long-term care pharmacy Omnicare liable for improperly billing the federal government, resulting in more than $135 million in damages. Omnicare is the largest pharmacy serving the nursing home sector.
A jury found Omnicare billed Medicare, Medicaid and TRICARE for over 3 million false claims resulting in almost $135.6 million in damages, totaling “one of the largest damages verdicts rendered by a jury in a False Claims Act case,” according to the U.S. Dept. of Justice. That amount is expected to grow to more than $406 million given that the federal government is under the False Claims Act entitled to three times the amount of the damages.
During the four-week trial, the jury also found CVS Health liable for causing Omincare to submit false claims.
A spokesperson for CVS Health said the company plans to appeal the decision.
“This lawsuit centered on a highly technical prescription dispensing record keeping issue that was allowed by law in many states. The dispensing practices referenced were limited to Omnicare, ended in 2018, were used by many others in the industry at the time, and were accepted by CMS,” Amy Thibault, executive director of corporate communications, external affairs at Omnicare, told Senior Housing News. “There was no claim in this case that any patient paid for a medication they shouldn’t have or that any patient was harmed.”
According to the Dept. of Justice, Omnicare is alleged to have distributed drugs that were not supported by valid prescriptions under state law between 2010 and 2018, which it then billed to Medicare, Medicaid and TRICARE.
Omnicare pharmacist Uri Bassan originally filed the lawsuit on behalf of the federal government, 29 states and the District of Columbia in 2015, according to legal publication Law360. The federal government in 2019 filed a complaint against CVS and Omnicare alleging the pharmacy “‘rolled over’ prescriptions for elderly and disabled individuals living in more than 3,000 residential long-term care facilities, including assisted living facilities operated by the largest long-term care providers in the country, such as Brookdale Senior Living, Atria Senior Living, Sunrise Senior Living Services, and Five Star Senior Living.”
Specifically, the government alleged Omnicare’s computer system assigned a new prescription number, or even a fake number of authorized refills, so that pharmacists could keep dispensing those medications and Omnicare could keep getting paid. The suit alleged that Omnicare allowed prescriptions to roll over in at least 1,766 residential facilities between 2010 and 2018.
Omnicare and CVS sought a dismissal of the case with an argument that centered on the fact that regulation prohibiting companies from filling prescriptions came about only in 2013. The companies also said that state laws gave them the ability to refill expired prescriptions for certain kinds of health facilities, and that CVS was not subject to the case given it was not directly involved in Omnicare’s operations.
That argument ultimately did not convince U.S. District Court Judge Colleen McMahon and the case proceeded, according to Law360.
In 2022, CVS Health explored selling Omnicare after determining its long-term care pharmacy business was no longer a “strategic asset” earlier that year. But the company halted that sale in 2023 after finding that Omnicare’s value to CVS exceeded what the company would get in a sale.
