Rite Aid Corporation and its subsidiaries, Elixir Insurance Company, RX Options LLC, and RX Solutions LLC, have agreed to pay $101 million to resolve allegations that they violated the False Claims Act (FCA) by failing to accurately report drug rebates to the Medicare Program.
The settlement resolves allegations that, between 2014 and 2020, the defendants improperly reported to the Centers for Medicare and Medicaid Services (CMS) portions of rebates received from manufacturers as bona fide service fees, even though manufacturers did not negotiate with the defendants to pay such fees.
“Participants in Medicare’s drug program must accurately report price concessions, including drug manufacturer rebates, to ensure that the government receives the benefit of those concessions,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “Today’s settlement reflects the Justice Department’s commitment to hold accountable entities that pursue their own financial interests at the expense of taxpayer programs.”
“Rite Aid and its Elixir subsidiaries lined their corporate pockets with millions of dollars of manufacturer rebates that should have been reported to Medicare,” said U.S. Attorney Rebecca C. Lutzko for the Northern District of Ohio. “Each of those dollars could have been used to benefit Americans with genuine health care needs. Our office will not tolerate deceptive health-insurance practices, and we will vigorously pursue those who violate the FCA.”
The civil settlement includes the resolution of claims brought in 2021 under the qui tam, or whistleblower, provisions of the False Claims Act by Glenn Rzeszutko, who previously worked for RX Options.
Under Medicare Part D, private entities known as Part D Plan Sponsors offer and administer insurance plans that provide prescription drug coverage to enrolled Medicare beneficiaries. Part D Sponsors must submit annual reports to CMS with information about rebates and other remuneration the Plans received from drug manufacturers in connection with the Part D drugs provided to beneficiaries, which ensures that the government receives the benefit of any price concessions provided by drug manufacturers to purchasers of the drugs covered under the Part D plan.
The United States further alleged that Elixir Insurance knew the retained rebates did not meet the regulatory definition of bona fide services fees. The settlement is based on the companies’ ability to pay and was approved on June 28 by the bankruptcy court as part of Rite Aid’s plan of reorganization, which is expected to become effective later this summer.
Rite Aid offered Medicare drug plans and pharmacy benefits manager (PBM) services through Elixir Insurance, RX Options, and RX Solutions. The companies will pay the United States $101 million, and RX Options and RX Solutions will grant the United States an allowed, unsubordinated, general unsecured claim for a total of $20 million in Rite Aid’s bankruptcy case pending in the District of New Jersey.
“Truthful and accurate documentation in the delivery of health care goods or services is crucial to the integrity of federal health care programs,” said Deputy Inspector General for Investigations Christian J. Schrank of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “Improper submission of manufacturer drug rebates and fees by Part D Plan Sponsors for pharmaceutical products in order to make more money will not be tolerated. Collaborating with our law enforcement partners, HHS-OIG is committed to preventing and investigating health care fraud in Medicare and other taxpayer-funded health care programs.”
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Key Facts
- State: Federal
- Category: Drug Trafficking|Fraud & Financial Crimes|Violent Crime
- Source: DOJ Press Release â†â€â€
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