A Manhattan judge has ordered CVS Health’s Omnicare unit to pay nearly $949 million in penalties and damages for submitting millions of false prescription claims to U.S. government healthcare programs between 2010 and 2018.
A federal judge in Manhattan has ordered CVS Health’s long-term care pharmacy unit, Omnicare, to pay $948.8 million in penalties and damages. The ruling stems from a whistleblower case accusing the company of submitting over 3.3 million false claims to Medicare, Medicaid, and Tricare between 2010 and 2018, billing for prescriptions that had expired or run out of refills without proper documentation or pharmacist approval.
In 2015, Uri Bassan, a former Omnicare pharmacist based in Albuquerque, New Mexico, filed a whistleblower lawsuit under the False Claims Act. Bassan alleged that Omnicare had been systematically submitting false claims to federal healthcare programs by continuing to dispense medications after prescriptions had expired or run out of refills, without obtaining new prescriptions from doctors. This practice was especially prevalent in long-term care facilities, where Omnicare primarily operates. The U.S. Department of Justice later joined the lawsuit in 2019 after investigating the claims. Around the same time Bassan filed his complaint, CVS Health had acquired Omnicare in a deal aimed at expanding its footprint in senior and long-term care markets. Although CVS did not initiate the alleged misconduct, court findings revealed that approximately 30% of the improper claims occurred after the acquisition, prompting the judge to hold CVS partially liable for the fraud. The case has since become one of the most significant enforcement actions involving pharmacy billing under federal health programs.
According to Reuters, Judge McMahon stated: “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.”
CVS defended the conduct, claiming that “This lawsuit centered on a highly technical prescription dispensing recordkeeping issue that was allowed by law in many states. There was no claim … that any patient paid for a medication they shouldn’t have or that any patient was harmed.”
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Although CVS says the issues were “technical,” the decision demonstrates the importance of strict compliance, documentation, and the potential consequences of administrative shortcuts in healthcare. The ruling also affirms that parent companies can be held responsible for subsidiary misconduct even years after taking control.
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The False Claims Act is a federal law that allows private individuals (whistleblowers) to sue on behalf of the U.S. government when they believe a company has knowingly submitted false claims for government funds. It includes provisions for triple damages and civil penalties.
According to court findings, CVS was made aware of the ongoing practices and failed to correct them. Approximately 30% of the false claims occurred after CVS took over Omnicare.