Many of you already know by this point like how big of a name CVS Health is in the pharmacy business, right here in the country. But, recently, they were sued by the government as well as an Omnicare pharmacist because the company itself was involved in some shady activities. And it wasn’t like CVS Health was doing this just recently, it really was a long-running issue, from 2010 to 2018, to be precise here. So, let’s get on with the details of this CVS Lawsuit, and see why they’re being hit with nearly $1 billion ($949 million, to be exact) in penalties.
What Is Omnicare and What’s CVS Got to Do With It?
Omnicare is a corporation that distributes prescription drugs used in long-term care facilities, including nursing homes and assisted living centers right here in the United States. As part of its expansion of healthcare services, CVS acquired Omnicare in 2015. Indeed, the transaction had a strategic concept. However, in addition to the advantages, it soon became known that they had assumed a lot of compliance issues that would, in due time, be a major setback.
How Did This CVS Lawsuit Start?
It all started in 2015 when an ex-pharmacist of Omnicare expressed doubts and initiated a whistleblower lawsuit. The accusation? That Omnicare was sending the bills to Medicare, Medicaid, and Tricare for non-existent prescriptions, that questions legality as a whole and the federal law. In other words, they were only trying to defraud the government by asking for prescription drugs that were not valid, an act in which they were out of bounds with the law.
In 2019, the Department of Justice entered the picture and the situation changed dramatically.
What Did the Court Find?
Now take a leap of 5 years into the future, in April 2025, when a jury made an assessment of the evidence and turned it in favor of Omnicare and found that Omnicare violated the False Claims Act by submitting more than 3.3 million false claims to federal healthcare programs between 2010 and 2018.
The visual representation is as follows:
- The government ended up paying $135.6 million on these false claims.
- Under the False Claims Act, that amount is tripled, bringing it to $406.8 million.
- On top of that, the court imposed $542 million in penalties.
- Total amount CVS/Omnicare now owes: $948.8 million.
What Are CVS’s Comments On This Case?
The decision has not been received well by CVS at all. The company immediately announced that it’s going to challenge the ruling. They explained the mistake mainly as a documentation error, not as a fraudulent mechanism, but not directly. They also said that the Centers for Medicare & Medicaid Services (CMS) had been looking into their processes before and hadn’t raised substantial objections.
Moreover, they made it clear that the beneficiaries were not affected and they did not have to pay for these mis-billed medicine prescriptions out of their own pockets.
But the court ruling was against the company. The judge reported that Omnicare could have made corrections in their practices on several occasions, whereas they did nothing to correct the situation.
How Bad Could It Have Been?
One of those things that would make your jaw drop is that, according to federal law, for each false claim, these people may have been charged at least $5,000. Therefore, with 3.3 million claims, the penalty would have been over $26.9 billion. In that context, $949 million may appear as a lower consequence.
However, it is still a significant amount of money. Even for a giant like CVS, which in 2024 crossed a revenue of $372 billion, a fine of nearly a billion is something hard to recover from, especially in combination with other costs that are on the rise, such as retail operations and medical benefits.
