CVS’ Omnicare Division Files for Bankruptcy Protection
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CVS’ Omnicare Division Files for Bankruptcy Protection
As GoLocal reported last month, Federal Court Judge Mitchell Goldberg issued a ruling that is the second staggering decision against Woonsocket-based CVS in recent weeks.
Whistleblowers brought the two cases alleging fraudulent overbilling.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTIn the first case, Goldberg tripled to $285 million the damages he had ordered CVS Caremark to pay in June, citing the federal False Claims Act. He added a $4.87 million civil fine.
“Goldberg rejected CVS' request to pay less, saying that while CVS Caremark was liable for only two years of overbilling, evidence at trial ‘made clear that the fraud was financially motivated, not the result of some innocent or mistaken belief,’” according to a report in Reuters.
Goldberg presided in March over a non-jury trial in the whistleblower case brought by Sarah Behnke, a former head actuary for Medicare Part D at Aetna.
“She accused CVS Caremark of having caused health insurers such as Aetna to submit inflated claims since 2010 to the Centers for Medicare and Medicaid Services (CMS), while pharmacies such as Rite Aid and Walgreens were paid less,” reported Reuters.
Second Blow to CVS
Goldberg's ruling was the second legal blow to CVS. Last month, a Manhattan federal judge ordered CVS' Omnicare unit to pay $948.8 million in a separate whistleblower lawsuit alleging fraudulent billing.
In the July decision, U.S. District Judge Colleen McMahon in Manhattan imposed a $542-million penalty for filing 3,342,032 false claims between 2010 and 2018. In addition, McMahon also awarded $406.8 million of damages, representing three times the $135.6 million that a jury had previously awarded.
Omnicare Seeks Protection - Blames Court Rulings
Omnicare also intends to use this process to address other financial challenges facing the broader long-term care pharmacy industry and to evaluate its restructuring options, including the implementation of a standalone restructuring or sale strategy, said the company.
“Omnicare remains fully focused on meeting the pharmacy needs of its customers and long-term care residents. During the court-supervised process, Omnicare is continuing to provide safe and reliable pharmacy services to long-term care facilities. Omnicare customers and patients can expect to continue to access pharmacy and clinical services without disruption,”
David Azzolina, President of Omnicare said, "Omnicare has a proud history of providing industry-leading, pharmacy and clinical care solutions to long-term care providers and their residents. Omnicare has been engaged in a civil lawsuit alleging technical violations of pharmacy law based on practices the government knew about and approved. There were no allegations of harm to any Omnicare patients nor did the government allege that any patient got anything other than the medicine they needed when they needed it. The District Court nevertheless imposed an extreme and, we believe, unconstitutional penalty. Given that ruling and a number of other issues facing our business, we now are taking necessary steps to move forward and ensure the continued delivery of safe and reliable pharmacy service to our customers."
Azzolina continued, "Supporting our customers and residents is our top priority. As we move through this process, we remain fully committed to providing optimal care for the residents and customers we serve. We are grateful to our facility and senior living community partners for their continued support. I want to thank the entire Omnicare team for their unwavering dedication and passion they bring to delivering the high level of service and clinical expertise that sets Omnicare apart."