CVS Health Corp (CVS.N) and its Omnicare unit were sued on Tuesday by the U.S. government, which accused them of fraudulently billing Medicare and other programs for drugs for older and disabled people without valid prescriptions.
The Department of Justice joined whistleblower litigation 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.
According to a civil complaint filed in Manhattan federal court, Omnicare would often assign new numbers to prescriptions after the original prescriptions expired or ran out of refills.
The government said this enabled Omnicare to bill Medicare Medicaid, and Tricare, which serves military personnel, for hundreds of thousands of drugs, under what the company internally called “rollover” prescriptions, from 2010 to 2018.
Many of the drugs were anticonvulsants, antidepressants and antipsychotics and treated serious conditions such as dementia, depression and heart disease, and sometimes had dangerous side effects requiring supervision by doctors, the government said.
“A pharmacy’s fundamental obligation is to ensure that drugs are dispensed only under the supervision of treating doctors who monitor patients’ drug therapies,” U.S. Attorney Geoffrey Berman in Manhattan said in a statement.
“Omnicare put at risk the health of tens of thousands of elderly and disabled individuals living in assisted living and other residential long-term care facilities,” he added.
The lawsuit seeks civil penalties and other damages.
CVS, one of the largest U.S. drugstore chains and pharmacy benefit managers, said it did not believe the claims had merit, and that it intended to defend itself in court.
“We are confident that Omnicare’s dispensing practices will be found to be consistent with state requirements and industry-accepted practices,” the company said in a statement.
CVS, based in Woonsocket, Rhode Island, bought Omnicare in 2015 for about $10.4 billion.
The government joined a lawsuit originally brought in June 2015 by Uri Bassan, a pharmacist who worked for Omnicare in Albuquerque, New Mexico.
It said Omnicare’s compliance department had acknowledged the dispensing problem internally two months earlier, when a regional officer expressed concern in an email that its systems allowed rollover prescriptions “without any documentation or pharmacist intervention.”
The False Claims Act lets whistleblowers sue on behalf of the federal government, and share in recoveries.
Twenty-nine U.S. states and the District of Columbia are also named as plaintiffs.
The cases is U.S. ex rel. Bassan v. Omnicare Inc, U.S. District Court, Southern District of New York, No. 15-04179.