Pa. A.G. Secures $433,000 for Medicaid Program Under National Settlements with Rite Aid, Wal-Mart

Attorney General Jerry Pappert announced that his Medicaid Fraud Control Section has secured $391,000 for the Pennsylvania Medicaid Program as part of an agreement with Rite Aid Corp. that settled allegations that the company submitted false claims to state and federal health care programs.

In a separate case, Pappert said his office secured $42,000 for the Pennsylvania Medicaid Program as part of a national agreement with Wal-Mart Stores. The $2.8 million national settlement was negotiated by attorneys from Pappert’s office, as well as state negotiators from South Carolina, North Carolina and Ohio representing the National Association of Medicaid Fraud Control Units.

Under the Rite Aid settlement, Pappert said Medicaid Programs in 30 states and the federal government will receive more than $7 million. Pappert noted that agents from his Medicaid Fraud Control Section helped federal authorities conduct an extensive investigation. As part of Pennsylvania’s settlement, Pappert said nearly $314,000 will go to the federal government and nearly $86,000 will go to the state government.

Pappert explained that Medicaid is a joint federal-state program. “It is important that retail pharmacies, as well as drug companies, follow the law and properly bill government programs for prescription drugs,” Pappert said. “The state attorneys general are committed to keeping a lid on drug prices and strict enforcement of our laws is one way to accomplish that goal.”

Pappert, a member of the Pharmaceutical Pricing Task Force of the National Association of Attorneys General, has made prescription drug pricing a priority of his administration. In March, Pappert filed a lawsuit against 13 major drug companies accusing them of using an illegal marketing scheme that inflated the cost of prescription drugs, including those used by cancer patients. Pappert is seeking a change in the way drug companies price their products and reimbursement for overcharges for Pennsylvania consumers and government agencies.

In the Rite Aid case, Pappert said the settlement resolves allegations that Rite Aid dispensed partial or “short” prescriptions due to insufficient stock but billed government health programs for the full amounts. Pappert said the company also allegedly returned to stock medication that was not picked up by consumers, billing the programs for the medicine as if a customer had obtained the drugs.

Pappert said the settlement covers the time period of January 1, 1997 to December 31, 2001. He added that the agreement settles a federal case with Rite Aid, originally brought as a “whistleblower” case, in federal courts in Pennsylvania and South Carolina. Under the federal False Claims Act, a percentage of the government’s recovery goes to the whistleblower.

Pappert said the terms of the Rite Aid settlement include an Integrity Agreement that will be administered by the Office of Inspector General of the federal Department of Health and Human Services in which Rite Aid agreed to modify its pharmacy billing operations to ensure future compliance with applicable laws and Medicare and Medicaid regulations. The Integrity Agreement requires the company to monitor these practices for problems and establishes sanctions for violations. In the Wal-Mart case, Pappert said, the Arkansas-based company is alleged to have dispensed partial or “short” prescriptions due to insufficient stock, but received full payment from government health programs.

In addition to the $2.8 million payment, Wal-Mart has reached an agreement with the federal Department of Health and Human Services’ Office of Inspector General that the company’s conduct will be monitored by the government under a four-year corporate integrity agreement.