Doctor concerned with health care law

Breaking news and expert analysis on legal and compliance issues

[Back To Home][Back To Archives]

From Health Law Daily, April 12, 2018

Customer receipts not enough to show Rite Aid submitted false claims

By Rebecca Mayo, J.D.

Customer receipts that show Medicaid was billed a certain price for prescription drugs is not proof that the pharmacy actually submitted claims to Medicaid for that amount. A district court denied a motion to dismiss and granted a relator leave to amend a complaint against Rite Aid Corporation for allegedly violating the False Claims Act (FCA) by billing Medicare and Medicaid higher prescription drug prices than they charge the general public (U.S. ex rel. Rahimi v. Rite Aid Corporation, April 11, 2018, Murphy, III, S.).

The scheme. Rite Aid offers hundreds of generic prescriptions at reduced prices through a free prescription discount program (Rx Program), however the reduced prices do not extend to prescriptions paid for in whole or in part by publicly funded health care programs—including those prescriptions paid for by Medicare Part D and Medicaid

According to the relator—a pharmacist—Rite Aid charged Medicare Part D and state Medicaid programs prices that significantly exceeded the prices that Rite Aid has routinely offered customers through its Rx Program. The misrepresentations of the pharmacy’s usual and customary costs would tend to cause CMS to issue inflated reimbursements, which is a violation of the FCA.

Pleading false claims. To plead a false claim, a relator must describe, with particularity, the fraudulent scheme and then must provide a representative claim that describes each step with particularity. The pharmacist adequately set the stage for pleading a false claim scheme and that the scheme is plausible, however he failed to show that the higher prices were actually submitted to the sponsors or state programs, and effectively to CMS.

The pharmacist had testimony from a Rite Aid pharmacist who claimed the software automatically assigns prices based on the customer’s information and only generates the Rx Savings price for customers enrolled in the program. Additionally, the pharmacist provided customer receipts for two Medicaid beneficiaries which showed that Medicaid was charged an inflated price. However, the pharmacist must plead with particularity not just that the patient filled the prescription at a particular price, but that the pharmacy then actually submitted the false claim to the government.

Decision. The pharmacist asked the court to treat exhibits attached to the complaint as supplements to the complaint, but the court found that merely treating the complaint as supplemented by the exhibits would not cure the deficiencies. However, according to the court, the exhibits show that the pharmacist possesses additional information that might allow an amended complaint to survive dismissal. Therefore, the court denied Rite Aid’s motion to dismiss and granted the pharmacist leave to file an amended complaint.

The case is No. 2:11-cv-11940-SJM-MAR.

Attorneys: Arun Subramanian (Susman Godfrey LLP) for Azam Rahimi. Allie Pang,U.S. Department of Justice, for the United States. Robert P. Zora (Dickinson Wright PLLC) for Rite Aid Corp.

Companies: Rite Aid Corp.

MainStory: TopStory CaseDecisions CMSNews BillingNews DrugBiologicNews FCANews MedicaidNews MedicaidPaymentNews PaymentNews PartDNews PrescriptionDrugNews ProgramIntegrityNews QuiTamNews MichiganNews

Back to Top

Health Law Daily

Introducing Wolters Kluwer Health Law Daily — a daily reporting service created by attorneys, for attorneys — providing same-day coverage of breaking news, court decisions, legislation, and regulatory activity.

A complete daily report of the news that affects your world

  • View full summaries of federal and state court decisions.
  • Access full text of legislative and regulatory developments.
  • Customize your daily email by topic and/or jurisdiction.
  • Search archives for stories of interest.

Not just news — the right news

  • Get expert analysis written by subject matter specialists—created by attorneys for attorneys.
  • Track law firms and organizations in the headlines with our new “Who’s in the News” feature.
  • Promote your firm with our new reprint policy.

24/7 access for a 24/7 world

  • Forward information with special copyright permissions, encouraging collaboration between counsel and colleagues.
  • Save time with mobile apps for your BlackBerry, iPhone, iPad, Android, or Kindle.
  • Access all links from any mobile device without being prompted for user name and password.