USA, Tennessee Sue Walgreens for False Claims to TennCare for Prescriptions Filled at Pharmacy

On Monday, the United States, on behalf of the Department of Health and Human Services as well as the state of Tennessee, filed a complaint in the Eastern District of Tennessee against defendant Walgreen Company for allegedly submitting false Medicaid claims for prescriptions filled at one of its pharmacies, when the patients purportedly did not qualify for reimbursement.

According to the complaint, the lawsuit comes from Walgreen’s “submission, or having caused the submission, of false or fraudulent claims for payment to the Tennessee State Medicaid Program (TennCare) for prescription medications.” The plaintiffs noted that the TennCare program provides funding for medical or health-related services to qualifying low-income individuals and families with the Medicaid costs shared between the state and the federal government. The plaintiffs claimed the defendant purportedly used false claims or caused false claims to be submitted to TennCare “insofar as Defendant knew or should have known that the patients’ prior authorization forms and medical records falsely characterized the medical condition of patients in order to obtain TennCare payments that Defendant would not otherwise have received.” The plaintiffs asserted that Walgreen was required to comply with the criteria for the TennCare preferred drug listing (PDL) and the TennCare Pharmacy Manual, of which it allegedly did not comply. Additionally, Walgreen purportedly failed to return the improperly received TennCare payments even after it was notified that it “billed TennCare and received payment for prescription medications dispensed to individuals who did not meet the clinical criteria for TennCare coverage.”

The plaintiffs alleged that the defendant operates a specialty pharmacy located in Kingsport, Tennessee, (the Kingsport Pharmacy) where these prescription medicines were provided. Reportedly from October 2014 to December 2016, certain medications to treat Hepatitis C that required prior authorization before they could be given to TennCare enrollees were improperly reimbursed through falsified records. Specifically, the plaintiffs noted that a patient’s medical condition must meet “certain clinical metrics in order to receive a prior authorization for one of these four prescription drugs,” namely, Daklinza, Harvoni, Sovaldi, and Viekira Pak. Therefore, a patient had certain criteria that must be met to obtain prior authorization for TennCare to pay for the prescription medicine.

According to the plaintiffs, an employee at the Kingsport Pharmacy persuaded physicians to refer patients with Hepatitis C to the Kingsport Pharmacy, asserting that she had “success in getting prior authorizations for Hepatitis C medications approved when other pharmacies could not.” However, the plaintiffs noted that “(o)ther pharmacies could not get approval because many of the patients did not meet” the criteria. As a result, the Kingsport Pharmacy began increasingly receiving prescriptions for Hepatitis C TennCare enrollees, as well as other necessary documentation. However, this employee allegedly “fraudulently and materially falsified, altered, or recreated the TennCare enrollees’ prior authorization forms, medical records, and/or drug test results in order to indicate that the patient was eligible to receive TennCare coverage pursuant to the PDL criteria.” The plaintiffs alleged that in total 65 TennCare enrollees did not meet the criteria, but received reimbursement because of the alleged falsified submissions.

The plaintiffs proffered that the Kingsport pharmacy generated more than $41 million between October 2014 and May 2016 of which the four drugs at issue here accounted for 77% of the defendant’s total revenue. Out of the more than $30 million for these four drugs, “TennCare paid more than $8 million. Approximately $5.93 million of that was paid based on fraudulent prior authorization and medical records that Defendant submitted.” As a result, the plaintiffs proffered that Walgreen was unjustly enriched as a result of this purported fraudulent scheme.

The instant action is brought under the False Claims Act, the Tennessee Medicaid False Claims Act, payment by mistake of fact and unjust enrichment.

The plaintiffs seek declaratory judgment in their favor; an award for damages, costs, and fees; and other relief.