U.S. Sues CVS Over Fraudulent Billing

CVS Health Corp (NYSE: CVS) and its Omnicare unit have been sued by the federal government over accusations of fraudulently billing Medicare, Medicaid, and Tricare, which serves military personnel, for drugs without valid prescriptions. The civil complaint was filed in Manhattan federal court, with twenty-nine U.S. states and the District of Columbia also named as plaintiffs. The lawsuit seeks civil penalties and other damages.

CVS, one of the largest U.S. drugstore chains and pharmacy benefit managers, bought Omnicare in 2015 for about $10.4 billion. The company said it did not believe the claims had merit, and that it intended to defend itself in court. A  CVS spokesman said, “We are confident that Omnicare’s dispensing practices will be found to be consistent with state requirements and industry-accepted practices.”

The Department of Justice is accusing Omnicare of violating the federal False Claims Act for illegally dispensing drugs to tens of thousands of patients in assisted living facilities, group homes for people with special needs, and other long-term care facilities from 2010 to 2018. Instead of obtaining new prescriptions from patients’ doctors, Omnicare pharmacies simply “rolled over” the prescriptions by automatically assigning a new prescription number, refills and prescription date. Omnicare allegedly allowed prescriptions to roll over in at least 1,766 residential living facilities.

Many of the drugs treated serious conditions and sometimes had dangerous side effects requiring supervision by doctors. Manhattan U.S. Attorney Geoffrey Berman said in a statement, “A pharmacy’s fundamental obligation is to ensure that drugs are dispensed only under the supervision of treating doctors who monitor patients’ drug therapies. Omnicare blatantly ignored this obligation in favor of pushing drugs out the door as quickly as possible to make more money.”

Omnicare has faced problems like this before. The company paid $50 million in 2012 to settle allegations of dispensing controlled substances to long-term care facility residents without valid prescriptions. Four years later, the company settled allegations of requesting and accepting kickbacks from Abbott Laboratories for $28.1 million. In that case, Omnicare promoted the drugmaker’s epilepsy drug to nursing home residents.