Attorney General James Announces Settlement With Walgreens Boots Alliance Over Medicaid Fraud Allegations For Over-Dispensing Insulin Pens

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Attorney General Letitia James today announced that New York, together with the federal government and other states, has reached a nationwide $209.2 million settlement with Walgreens Boots Alliance (Walgreens) concerning allegations of fraudulent over-dispensing of insulin pens at Walgreens pharmacies. The qui tam action, unsealed today, resolves allegations that Walgreens knowingly engaged in fraudulent conduct when it dispensed insulin pens. When filling insulin prescriptions, Walgreens did not always adhere to the dosage outlined by the prescribing doctor, but rather dispensed insulin pens in boxes containing five pens, regardless of the patient’s needs. This resulted in a pattern where Medicare and Medicaid beneficiaries were routinely receiving more insulin than prescribed and Walgreens was then billing Medicaid for the additional doses. Walgreens, headquartered in Deerfield, Illinois, operates the largest retail pharmacy chain in the U.S., with 8,309 locations across all 50 states.

“Cheating our state’s Medicaid program will never be tolerated by this office,” said Attorney General Letitia James. “We will continue to root out illegal practices that increase costs of health care and medication for all New York Medicaid recipients, and will hold accountable any provider that engages in these deceptive practices.”

Under the settlement, Walgreens will pay the United States and the States $209.2 million dollars. Of this amount, $89,185,625.10 will go to the state Medicaid programs to resolve civil allegations that Walgreens’ unlawful over-dispensing of insulin pens caused false claims to be submitted to Medicaid health care programs. The State of New York will receive $6,548,679.82 of this amount in restitution and other recovery.

Walgreens admitted, among other facts, that from January 1, 2006 to December 31, 2017:

  • When a state Medicaid program denied a claim from Walgreens because the reported days of supply for a full carton of five insulin pens exceeded the Medicaid program’s days of supply limit, it was Walgreens’ practice to dispense and bill for the full carton, and reduce the reported days of supply to conform to the program’s days of supply limit. Thus, Walgreens repeatedly reported days of supply data to state Medicaid programs that were different from, and lower than, the days of supply calculated according to the standard pharmacy billing formula of dividing the quantity of insulin being dispensed by the daily dose; and
  • As result of this practice, state Medicaid programs approved and paid a substantial number of claims submitted by Walgreens for insulin pen refills that the programs would not have approved if Walgreens had reported the days of supply for previous fills calculated according to the standard pharmacy billing formula of dividing the quantity dispensed by the daily dose.

In recent years, New York’s Medicaid program paid an average of approximately $425 per box of five insulin pens to pharmacies on behalf of Medicaid beneficiaries.

The investigation was initiated after a whistleblower filed a lawsuit in 2015 in the United States District Court for the Southern District of New York under the qui tam provisions  of the federal False Claims Act and the named plaintiff states’ respective false claims statutes.  The relator in this case will receive a share of the settlement proceeds after full payment by Walgreens.  The case is captioned United States of America et al., ex rel. Adam Rahimi et al. v. Walgreen Boots Alliance, Inc., Civil Action No. 15-CV-5686 (S.D.N.Y.) (Crotty, J.).

The insulin pens investigation and settlement were the result of a coordinated effort between the U.S. Attorney’s Office for the Southern District of New York, and the National Association of Medicaid Fraud Control Units (NAMFCU).  A NAMFCU Team conducted the investigation of Walgreens and participated in the settlement negotiations on behalf of the states, and included representatives from the Offices of the Attorneys General for the states of Indiana, New York, Washington, Texas, Oklahoma and Massachusetts.

New York State’s case was handled by Special Assistant Attorney General Alee N. Scott with audit analysis conducted by Principal Auditor-Investigator Meghan Collins, both of whom were members of the NAMFCU Team, and are under the supervision of MFCU Civil Enforcement Division Chief Carolyn T. Ellis.

The New York State Medicaid Fraud Control Unit is led by Director Amy Held and Assistant Deputy Attorney General Paul J. Mahoney. The New York Attorney General’s Division of Criminal Justice is led by Chief Deputy Attorney General José Maldonado.