Walgreens to pay $106M in DOJ violation over prescriptions billed, never picked up

Just weeks after the Department of Justice announced its new effort that would reward health care whistleblowers, Walgreens has agreed to pay $106.8 million to resolve three cases filed by whistleblowers alleging violations of the False Claims Act and state statutes.

Between 2009 and 2020, Walgreens submitted false claims for payment to Medicare, Medicaid and other federal health care programs for prescriptions that it processed but that were never picked up by beneficiaries, the DOJ alleges.. As a result, Walgreens received tens of millions of dollars for prescriptions that it never actually provided to health care beneficiaries.

In January 2020, Walgreens disclosed to the government “that issues with its billing systems and practices” had led to billed prescriptions for which it should not have received payment. Generally, pharmacies return uncollected prescriptions to stock and cancel the order after 10-14 days.

The federal government’s settlement with Walgreens resolves three cases pending in New Mexico, Texas and Florida under the whistleblower provision of the False Claims Act, which permits private parties to file suit for false claims on behalf of the United States and to share in any recovery.

Steven Turck, a former Walgreens pharmacy manager, filed the whistleblower suit in Texas related to billing Medicare, Medicaid and other federal health care programs, and will receive $14,918,675. Andrew Bustos, a former Walgreens district pharmacy supervisor, filed the whistleblower suit in New Mexico related to billing Medicare Part B and will receive $1,620,000.

The federal share of the recovery is $91.9 million, and a total of $14.9 million will be returned to individual states.

Walgreens blamed an electronic system error for the overbilling. “Due to a software error, we inadvertently billed some government health care programs for a relatively small number of prescriptions our patients submitted but never picked up,” a Walgreens spokesperson said. “We corrected the error, reported the issue to the government and voluntarily refunded all overpayments.”

The $106.8 million settlement is not a huge payout, considering Walgreens operates one of the largest retail pharmacy chains in the U.S., however, the pharmacy chain has closed a number or underperforming stores in the last year.

Related: Humana will pay $90M for overcharging Medicare for drugs, in False Claims Act suit

In August, the DOJ unveiled its new three-year Corporate Whistleblower Awards Pilot Program to incentivize Americans to tell the department about types of fraud not commonly reported to existing whistleblower programs, such as the program that rewards people who help federal investigators identify major cases of Medicare fraud. Whistleblowers who provide information leading to assets being forfeited by a prosecuted entity could collect up to 30% of the first $100 million in net proceeds forfeited.

As part of the resolution, Walgreens received credit under the department’s guidelines for taking disclosure, cooperation and remediation into account in False Claims Act cases. Walgreens also implemented enhancements to its electronic pharmacy management system to prevent overbilling errors from occurring in the future. Because Walgreens previously refunded $66,314,790 pertaining to the settled claims, Walgreens will receive a credit for this amount.

“Adopting new technology and systems can be beneficial for providers, beneficiaries, and federal payors, including Medicare, Medicaid and TRICARE,” said U.S. Attorney Damien M. Diggs for the Eastern District of Texas. “However, we will not allow companies to hide behind their implementation of ill-conceived technology and systems that result in billing federal health care programs for goods and services never provided to beneficiaries.”