The ubiquitous American pharmacy, Walgreens, has been under fire from the feds a lot lately. A year ago, parent company Walgreens Boots Alliance paid out $500 million to Uncle Sam after legal claims that it fueled opioid addiction in New Mexico by failing to stop illegal pill sales.
Now, the pharmacy giant has just agreed to pay $106.8 million to settle completely different claims that it improperly billed government healthcare programs for prescriptions that were never dispensed.
False Claims Allegations
The settlement, announced by the U.S. Department of Justice (DOJ) earlier this month, involved a legal dispute based on allegations that Walgreens submitted false claims to Medicare, Medicaid, and other federal health programs.
Federal healthcare law makes it clear that the accuracy of claims submitted to government programs is paramount, and that any discrepancies (even accidental ones) can result in severe financial and legal repercussions. In 2020, Walgreens self-reported issues with its billing systems, acknowledging that a software error had led to inadvertent billing for prescriptions that were never collected by patients.
The DOJ then investigated and brought a lawsuit against the pharmacy chain, claiming that it improperly billed federal healthcare programs for prescriptions that were processed but never picked up by customers between 2009 and 2020. This purportedly resulted in tens of millions of dollars in payments for undispensed prescriptions. The allegations were brought under the False Claims Act (FCA), a law that holds entities liable for knowingly submitting false claims to the government.
After back and forth in court proceedings, the case finally settled this month.
The Case Settles
The settlement resolves three whistleblower lawsuits filed in Florida, New Mexico, and Texas. These suits were initiated under the qui tam provision of the FCA, which allows private individuals to file lawsuits on behalf of the federal government and share in any recovered funds. Steven Turck, a former Walgreens pharmacy manager, and Andrew Bustos, a former district pharmacy supervisor, were instrumental in bringing the allegations to light.
The financial breakdown of the settlement includes $91,881,530 allocated to the federal government and $14,933,259 to Medicaid-participating states. Walgreens had previously refunded $66.3 million related to the claims, which was credited against the total settlement amount. Turck will receive $14.92 million, while Bustos will receive $1.62 million from the settlement.
Despite its prior admissions in 2020, Walgreens did not concede legal liability in the settlement. In response to the settlement, Walgreens stated that the billing errors were due to a software issue and emphasized that the company had taken significant steps to rectify the problem. This included enhancing its electronic pharmacy management system to prevent future occurrences and voluntarily refunding the overpayments.
DOJ’s Work Not Done
Federal officials underscored the importance of the settlement in maintaining the integrity of national healthcare programs. Brian Boynton, head of the DOJ's Civil Division, commented: "Federal health care programs provide critical health care services to millions of Americans. We will hold accountable those who abuse these programs by knowingly billing for goods or services they did not provide."
This settlement is part of a broader effort by the DOJ to address healthcare fraud. Recent settlements include a $60 million agreement with CVS Health subsidiary Oak Street Health over allegations of paying kickbacks for patient referrals and a $12.76 million settlement with Dunes Surgical Hospital for improper financial relationships with physician groups.
Federal authorities continue to crack down on fraudulent practices in the healthcare sector. As this latest settlement shows, pharmacies and healthcare professionals must be diligent in billing for Medicare and Medicaid. The government routinely files lawsuits -- and criminal charges, when warranted -- for improper billing.
Related Resources:
- Medication Abortion Drugs Available at Pharmacies for Now (FindLaw's Law and Daily Life)
- Is it Illegal To Give Prescription Drugs to a Friend? (FindLaw's Law and Daily Life)
- False Claims Act and Health Care Fraud (FindLaw's Learn About the Law)
