A recent ruling out of New York is the latest notable step in a very long-running saga involving alleged healthcare fraud by Omnicare, a Pharmacy Benefit Manager (PBM) owned by CVS. The companies were ordered to pay about $949 million in a settlement.
The case was initially filed in 2015 (the same year CVS acquired Omnicare) by a whistleblower: an Omnicare pharmacist who worked primarily in New Mexico. The whistleblower filed her suit under the False Claims Act (FCA) and state equivalents. These are laws that allow private individuals to file suit in the name of the U.S. (or states) and allege that healthcare programs like TRICARE, Medicare, or Medicaid are being defrauded. Whistleblowers are eligible to share in 15-30 percent of any ultimate recovery.
The crux of the allegations in this case is that Omnicare dispensed drugs to individuals in various long-term residential facilities that were not supported by valid prescriptions under state law and charged Medicare, Medicaid, and TRICARE for those drugs. The allegations touch patients in more than 3,000 facilities. Allegedly, the prescriptions were automatically assigned new prescription numbers, refills were automatically authorized, and prescriptions were periodically refilled in bulk without confirming that the prescriptions were still medically necessary or authorized by a physician.
CVS, as Omnicare’s parent company, was accused of “causing” the false claims to be submitted, as it was aware of deficiencies in Omnicare’s practices, but failed to correct them.
The federal government and 29 states joined the case in 2019, and it went to trial this Spring, in New York. After the trial, the jury unanimously found about $135 million in damages and held both companies, Omnicare and CVS, liable for the conduct. This was one of the largest-ever jury verdicts under the FCA.
In July, the Judge trebled (tripled) damages, which is required under the law, upping the damages figure to nearly $500 million. In the same ruling, the Judge also imposed penalties, which the law allows to attach to every false claim. The penalty amount was roughly another $500 million, with CVS Omnicare being held to have liabilities of $949 million. Additional motions are pending, including requests by Omnicare to toss the jury’s verdict and by CVS to be removed from the case. After those are decided, an appeal to the Second Circuit Court of Appeals is possible. Last month’s ruling is an important milestone, but this legal battle is likely far from over.
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