National pharmacy chain Walgreens agreed to pay $269.2 million to the federal and state governments to settle claims that the drugstore chain improperly billed Medicare, Medicaid and other federal healthcare programs over insulin drugs and a consumer-discount initiative.

When pharmacies like Walgreens seek reimbursement from federal healthcare programs for insulin pens dispensed to program beneficiaries, they are required to submit accurate data concerning, among other things, the days of supply for each prescription filled. In pharmacy practice, days of supply mean the number of days that the amount of insulin being dispensed should last if the patient used the insulin strictly according to her prescriber’s directions for use. Having accurate days-of-supply data is critical to federal healthcare programs because these programs rely on the days-of-supply data reported by pharmacies like Walgreens to decide whether to pay for a refill or to deny a refill claim as premature.

Here is a brief summary of the improper scheme alleged by the federal government:

From January 2006 until December 2017, Walgreens routinely submitted false insulin pen claims to four federal healthcare programs – Medicare, Medicaid, TRI CARE, and the workers’ compensation program administered by the U.S. Department of Labor. These fraudulent submissions resulted from two practices at Walgreens in relation to how it dispensed insulin pens to beneficiaries of the relevant federal programs and sought reimbursement from the programs for these insulin pens.  First, Walgreens’s electronic pharmacy management system defined a box of insulin pens – typically containing five individual pens – as the minimum package size. In other words, Walgreens phatmacists were not able to dispense fewer than a full box of insulin pens at a given time.  Second, if dispensing a full box of insulin pens would exceed the maximum days of supply limit for insulin established by payors like Medicaid or Medicare, Walgreens would falsely report that the days of supply for the box of pens equaled the applicable limit, instead of reporting the actual days of supply as calculated according to the standard pharmacy billing formula, which was higher and would have resulted in a denial of reimbursement by payors like Medicaid.  By engaging in these two practices, Walgreens submitted hundreds of thousands of false insulin pen claims, which understated days of supply, to the relevant federal programs.  Further, by under-reporting the days of supply data in insulin pen claims, Walgreens prevented the automated checks established by the relevant federal programs from identifying and denying premature refill claims. This, in turn, caused those programs to pay for more insulin than many beneficiaries actually needed. Finally, Walgreens’s routine dispensing of unnecessary insulin pens led to a substantial waste of valuable medications and produced the potential for fraud and abuse involving insulin pens.

The government also alleged that Walgreens defrauded a program called the Prescription Savings Club that gave discounts to customers who ordered drugs from Walgreens. Prosecutors said the company failed to disclose the lower prices when seeking reimbursement from Medicaid.

“Overbilling and improper billing of Medicare and Medicaid unduly burden taxpayers and put the solvency of these vital health-care programs at risk,” U.S. Attorney Geoffrey Berman in Manhattan said in a statement. According to Mr. Berman’s statement, the company “admitted and accepted responsibility for the conduct the government alleged in its complaints under the False Claims Act.”

Both cases arose from lawsuits filed years ago by whistle-blowers under the False Claims Act. They were both unsealed on Tuesday. Walgreens’ payments will go to federal and state governments.

Under the False Claims Act, the whistleblower may receive a reward of 15 percent to 25 percent of what the government recovers, if the government joins the qui tam case.  If the government declines to join the qui tam lawsuit and the whistleblower proceeds against the defendant anyway, the relator is entitled to 25 percent to 30 percent of the recovery that the government receives.

The amount received by the whistleblower depends on many factors, including:

• The level of detail provided by the whistleblower regarding the fraudulent conduct.
• Whether the fraud related to a significant safety issue.
• The quality and significance of the assistance the whistleblower and the whistleblower’s attorney gave to the government in the case.

The U.S. didn’t say how much the whistle-blowers in the Walgreens cases stand to collect.

The cases are U.S. v Walgreens Inc., 12-cv-300, and U.S. v Walgreens Boots Alliance Inc., 15-cv-5686, U.S. District Court, Southern District of New York (Manhattan).

If you have knowledge of fraudulent billings made by your employer against the federal government, speak with an attorney experienced in handling false claims cases.  Josh Borsellino is a Texas whistleblower attorney in Fort Worth that represents workers in claims against their employers.  For a free consultation, call Josh at 817.908.9861 or complete this form.