CVS Health Corp's Omnicare unit has agreed to pay $8 million to resolve claims that its prescription verification system resulted in false claims being submitted to government healthcare programs.
The settlement, announced on Tuesday by Acting U.S. Attorney William Fitzpatrick in New Jersey, resolves claims by the federal government and 28 states arising out of a whistleblower lawsuit filed under the False Claims Act.
The deal resolved civil claims arising from what the U.S. government said was Omnicare's submission of false claims for payment for drugs under the Medicare Part D and Medicaid programs from 2008 to 2014.
The government said Omnicare, in order to increase profits, designed an automated label verification system that resulted in the submission of claims for generic drugs different from those dispensed to patients.
It also resulted in drugs being dispensed with patient-specific labels displaying an incorrect product identifier called a National Drug Code, affecting Omnicare's ability to conduct recalls, the government said.
"Ensuring accuracy in the dispensing of and billing for medication in the Medicare Part D and Medicaid Programs, especially to long-term care patients, is vital to public safety," Fitzpatrick said in a statement.
CVS in a statement said the false submissions took place before it acquired Omnicare in 2015. Omnicare neither admitted nor denied wrongdoing as part of the settlement.
"The company agreed to settle this matter to avoid the expense and uncertainty of protracted litigation," CVS said.
The lawsuit was filed under the False Claims Act, which allows whistleblowers to sue companies on the government's behalf to recover taxpayer money paid out based on fraudulent claims.
If successful, whistleblowers receive a percentage of the recovery. A government decision to intervene is typically a major boost to such cases.
In this case, the two former Omnicare pharmacists who filed the lawsuit, Elizabeth Corsi and Christopher Ezzie, will receive more than $2 million as their share of the recovery and to resolve employment claims, Fitzpatrick's office said.
The case is U.S. ex rel Corsi v. Omnicare Inc, U.S. District Court, District of New Jersey, No. 14-cv-1136.
(Reporting by Nate Raymond in Boston; Editing by Jonathan Oatis and Richard Chang)