Walgreen Co. Pays $9.86M to Settle Allegations of Improper Medi-Cal Billings

On April 20, 2017, U.S. Attorney for the Eastern District of California Phillip A. Talbert announced that Walgreen Co. (Walgreens) has paid $9.86 million to resolve allegations that it violated the Federal False Claims Act, when it knowingly submitted claims for reimbursement to California’s Medi-Cal program that were not supported by applicable diagnosis and documentation.

Walgreens is one of the largest drugstore chains in the United States, operating approximately 630 stores in California. The company is headquartered in Deerfield, Illinois. The Medi-Cal program is administered by the California Department of Health Care Services (DHCS) and relies on both federal and state funding to provide health care to millions of Californians, including those with low incomes and disabilities.

Medi-Cal utilizes a formulary list, commonly known as “Code 1” drugs, which designates certain restrictions for each listed drug, including restrictions pertaining to diagnoses. Medi-Cal will reimburse certain Code 1 drugs only for approved diagnoses. Pharmacies serve the critical gatekeeping function of confirming and certifying that these Code 1 drugs are dispensed for the approved diagnoses. The settlement resolves allegations that Walgreens failed to confirm and document the requisite diagnoses, and in some instances dispensed drugs for non-approved diagnoses, then knowingly billed Medi-Cal for these prescriptions.

The allegations resolved by this settlement were first raised in two lawsuits filed against Walgreens under the qui tam, or whistleblower, provisions of the False Claims Act by a former Walgreens pharmacist and a former pharmacy technician. The Act allows private citizens with knowledge of fraud to bring civil actions on behalf of the government and to share in any recovery. The whistleblowers in this matter will collectively receive approximately $2.3 million of the recovery proceeds.

“This settlement illustrates our commitment to protect the integrity of California’s Mediā€‘Cal program,” said U.S. Attorney Talbert. “Regulations like those at issue here protect both critical funding and beneficiaries served. My office will continue working to ensure that pharmacies comply with these regulations.”

About Faruqi & Faruqi, LLP

Faruqi & Faruqi, LLP focuses on complex civil litigation, including securities, antitrust, consumer class actions, shareholder derivative litigation and whistleblower (Qui Tam) litigation. The firm is headquartered in New York, and maintains offices in California, Delaware and Pennsylvania. Since its founding in 1995, Faruqi & Faruqi, LLP has served as lead or co-lead counsel in numerous high-profile cases which ultimately provided significant recoveries to investors, consumers and employees. To schedule a free consultation with our attorneys and to learn more about your legal rights, call our offices today at (877) 247-4292.

About T. Talyana Bromberg

Talyana Bromberg is a partner in Faruqi & Faruqi, LLP's Pennsylvania office and chair of its False Claims Litigation group. Ms. Bromberg focuses her practice on representing whistleblowers in Medicare and Medicaid fraud cases, educational, financial, tax, defense contractors' fraud and matters involving bribery under the Foreign Corrupt Practices Act.

Ms. Bromberg was a lead attorney representing whistleblower Ronald Streck in the lawsuits against pharmaceutical manufacturers AstraZeneca Pharmaceuticals LP, Cephalon, Inc., Biogen Inc., and Genzyme Corp. relating to underpayment of Medicaid rebates, with settlements totaling over $59.8 million. She represented whistleblowers in pharmaceutical lawsuits against Abbott Laboratories related to off-label promotion and payment of kickbacks for anti-seizure drug Depakote that resulted in a $1.6 billion settlement; against GlaxoSmithKline related to unlawful marketing tactics and kickbacks for GSK drug Advair for a $1.04 billion settlement; and against Pfizer for alleged illegal promotion of its kidney transplant drug Rapamune, resulting in $257 million settlement.

The False Claims Act allows whistleblowers to sue those who commit fraud against the government and to receive between 15 and 30 percent of the recovered funds. The law covers fraud involving any government-funded contract or program, including Medicare, Medicaid, military, transportation, housing, educational, agricultural, or other program. Separate IRS, SEC and CFTC whistleblower programs cover federal tax fraud, securities and commodities fraud. Since 1986, whistleblowers have helped the government to recover more than $40 billion by bringing lawsuits under the federal and state False Claims Acts.

Posted by T. Talyana Bromberg

Partner at Faruqi & Faruqi, LLP
Pennsylvania Office
Tel: (215) 277-5770
Fax: (215) 277-5771
Email: tbromberg@faruqilaw.com
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