CVS Health Corp (NYSE:CVS) Omnicare Unit Agrees To Pay Up To $8 Million For False Claims

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An automated label verification system designed by CVS Health Corp (NYSE:CVS) Omnicare unit presented false claims to the government healthcare programs. As a result, a whistleblower lawsuit filed by the federal government and 28 states under the False Claims Act is now demanding a payment of $8 million from the Omnicare unit

The false claims for payment for drugs given to Medicare and Medicaid beneficiaries according to the U.S. government are dated between 2008 and 2014. Nonetheless, CVS has agreed to pay the said amount citing its interest to settle the lawsuit, which was before Acting U.S. Attorney William Fitzpatrick in New Jersey.

The importance of adhering to public safety code of ethics

The government says that Omnicare’s goal was to increase profits through the automated label verification system. However, this was not successful. Instead, it resulted in dispensed drugs with patient-specific labels, which in return displayed an incorrect product identifier known as the National Drug Code.

In the ruling Fitzpatrick 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”

The whistleblowing efforts will be rewarded

Apparently, Omnicare says that the only reason it is agreeing to settle the matter is in avoidance of other uncertainties of extended litigation. Otherwise, it may have chosen to cling to its claims that the allegations occurred before it purchased Omnicare for $10.4 billion in 2015.

However, as it feels the pinch of parting with $8 million, two former Omnicare pharmacists, Elizabeth Corsi and Christopher Ezzie will be laughing all the way to the bank. Their whistleblowing efforts will be rewarded with more than $2 million.

Their lawsuit against their former employer was guided by the False Claims Act under which companies can be sued in the recovery of taxpayer’s money. Many such cases have been receiving a lot of boost from the government and perhaps the reason the duo decided to spill the beans.

In the meantime, CVS’s stock was trading at $76.33 a decline of $2.79 or 3.53%.

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