CVS Health’s Omnicare unit must pay $948.8 million in penalties and damages following a federal ruling on Monday in a whistleblower lawsuit accusing the company of massive Medicare fraud involving over 3 million false claims for federal reimbursement.
Manhattan U.S. District Judge Colleen McMahon issued the ruling for a case that began in 2015, when a whistleblower accused the company of fraudulently submitting reimbursement claims for to Medicare, Medicaid, and the military’s Tricare program for non-covered drugs worth over $135 million.
“This was a very big fraud on the government, one that lasted over almost a decade, and one that Omnicare was aware of but avoided taking steps to correct,” said McMahon.
The fraud allegedly continued for a period from 2010-2018, and included a staggering 3,342,032 fraudulent claims. The lawsuit, filed by the Omnicare whistleblower, accused the company of dispensing drugs to people in assisted living facilities and nursing homes without proper prescriptions.
In 2019, years after the suit began, the Department of Justice (DOJ) signed on to the case, and a jury ruled in favor of the federal government last year. Under the False Claims Act, a whistleblower can bring a lawsuit on behalf of the federal government, and receive a share of the damages awarded. That law also requires damages to be tripled against the company responsible for the fraud.
As a result, the federal judge ordered the $406.8 million in damages after the jury initially decided on a $135.6 million award, in addition to a $542 million penalty.
CVS, which acquired Omnicare, is liable for $164.8 million, after they stopped their subsidiary from submitting 30 percent of the false claims.
CVS plans to appeal the ruling, arguing that the massive fine is unconstitutional.
“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,” said a CVS spokesman.
“The decision on penalties is unconstitutional, especially given the fact that there is no evidence that a single patient suffered harm,” he added.
McMahon, however, ruled that CVS is getting off easy based on the letter of the law of the False Claims Act, which institutes a minimum $5,000 penalty per false claim, which would have resulted in a $26.9 billion penalty.
“Admittedly [the fine] is a very big number. But this was a very big fraud on the Government, one that lasted over almost a decade, and one that Omnicare was aware of but avoided taking steps to correct,” said McMahon.
