CVS Health’s long-term care pharmacy unit, Omnicare, has been ordered to pay nearly $949 million in penalties for improperly billing Medicare, Medicaid, and Tricare over nearly a decade. The case, initiated by a former Omnicare pharmacist in 2015 under the False Claims Act, accused the company of dispensing medications without valid prescriptions and submitting false claims totaling more than $135 million. The U.S. Department of Justice joined the case in 2019, and a jury ruled in the government’s favor in 2023. U.S. District Judge Colleen McMahon upheld the penalty, writing, “This was a very big fraud on the Government, one that lasted over almost a decade, and one that Omnicare was aware of but avoided taking steps to correct.”
CVS argued that the penalty violates the U.S. Constitution’s prohibition against excessive fines, but the court disagreed. A CVS spokesperson responded, “This lawsuit centered on a highly technical prescription dispensing record-keeping issue that was allowed by law in many states. The dispensing practices referenced were limited to Omnicare, ended in 2018, were used by many others in the industry at the time, and were accepted by CMS.” They added, “There was no claim in this case that any patient paid for a medication they shouldn’t have or that any patient was harmed. The decision on penalties is unconstitutional, especially given the fact that there is no evidence that a single patient suffered harm.” The company intends to appeal the decision. While the fine represents a fraction of CVS’s 2024 annual revenue of $372.8 billion, it comes amid mounting financial pressure on the company’s retail pharmacy and insurance operations.
