A federal judge has ordered CVS Health subsidiary Omnicare to pay $948.8 million in penalties and damages for allegedly submitting fraudulent Medicare and Medicaid claims.

According to Becker’s Hospital Review, the order from the U.S. District Court for the Southern District of New York follows a jury finding Omnicare liable for over 3.3 million false claims related to prescriptions without valid physician authorization.

The subsidiary faces allegations it illegally charged the U.S. government for prescription drugs.

CVS denied the allegations and intends to appeal the judgement.

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The case, initially filed in 2015 by whistleblower Donald Gale under the False Claims Act, accused the subsidiary of dispensing drugs without current prescriptions across thousands of long-term care facilities.

In April, the jury found Omnicare’s practices resulted in $135.6 million in federal losses, and the final judgment tripled the damages under the False Claims Act’s treble damages provision.

The nearly $949 million award marks one of the largest in recent history against a pharmacy provider, according to the documents.

Manhattan Judge Colleen McMahon imposed a $542 million penalty and awarded $406.8 million in damages.

McMahon said it amounted to “very big fraud,” Healthcare Dive noted.

Healthcare Dive provided further details:

A former Omnicare pharmacist filed the lawsuit in 2015 accusing the PBM of improperly billing Medicare, Medicaid and the military’s Tricare program for over $135 million in drugs that weren’t actually covered by the programs.

Omnicare — the largest long-term care pharmacy services provider in the U.S. — fraudulently dispensed drugs to elderly and disabled people in long-term care and assisted living facilities without valid prescriptions, according to the complaint.

The Department of Justice joined the suit in 2019, and a jury ruled in favor of the government last spring.

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The False Claims Act allows whistleblowers to bring complaints on the government’s behalf and share in potential damages. The law is a key weapon in the government’s arsenal for combating fraud, and the driving force behind a major share of healthcare recoveries.

The law requires tripling of damages, a stipulation that inflated CVS’ penalty. The company argued that the $948.8 million award violates the Constitution’s prohibition against excessive fines, but McMahon did not agree.

“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,” the judge wrote.

 

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