Walgreens agrees to pay $16 million in Medicaid overbilling lawsuit
The retailer’s USA Drug pharmacy allegedly began selling commonly-prescribed generic drugs to its uninsured customers at low prices, but charged Medicare and Medicaid much higher prices for the same drug.
Walgreens, Stephen L. LaFrance Holdings and members of the USA Drug pharmacy chain have agreed to pay $16 million to settle a whistleblower lawsuit regarding the alleged overbilling of government health programs, attorneys from Vogel, Slade & Goldstein and Susman Godfrey announced this week.
The law firms successfully led the whistleblower lawsuit on behalf of their client, James D. Strauser, a pharmacist who worked at USA Drug, a regional pharmacy chain acquired by Walgreen’s.
“We are pleased that this lawsuit returns millions of dollars to the U.S. taxpayers,” partner Shelley Slade said in a statement. “We are also encouraged that the resolution may deter illegal practices by the many pharmacies around the country who continue to ignore their obligations to pass on their usual and customary charges to government payers.”
Strauser will receive 29% of the federal government’s recovery pursuant to a provision in the False Claims Act that rewards successful qui tam plaintiffs. He filed the action in U.S. District Court for the Northern District of Oklahoma in 2013 under the “qui tam” provisions under the federal False Claims Act and the false claims laws of New Jersey, Oklahoma, and Tennessee. He brought claims against individual pharmacies as well as Stephen L. LaFrance Jr., and Jason L. LaFrance, who were top USA Drug executives and the pharmacy chain was founded by their father, according to media release regarding the settlement.
Beginning in approximately 2008, Strauser alleged that the USA Drug chain began selling commonly-prescribed generic drugs to its uninsured customers at the same low prices charged by competing, big box stores like Walmart. At the same time, however, USA Drug unlawfully charged Medicare and Medicaid much higher prices for the same drug, the media release said.
The lawsuit alleged that USA Drug would charge Medicaid up to 38 times more than what its uninsured customers paid for a common anti-depressant medication.
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After Walgreens acquired USA Drug pharmacies, Strauser claimed that it continued with this fraudulent practice for several months and never reported nor refunded the prior overages to the affected government programs, according to the lawsuit.
“This important result puts money back in the pockets of government programs and shows why it is important to have individuals come forward who know about Medicare or Medicaid fraud,” Carmody said in the statement.
After the government plaintiffs declined to join the lawsuit in 2018, the case was transferred to the Northern District of Oklahoma. Strauser and his counsel then litigated the case for five years, reaching a settlement with the defendants earlier this year.