Rite Aid Agrees to Settle Claims of Medicare and Medicaid Fraud Involving Gift Cards

It is not uncommon for retailers and pharmacies to offer generous discounts or incentives for customers to switch their prescriptions and loyalties to the new company. However, as is becoming increasingly apparent across the United States, offering incentives to induce Medicare and Medicaid patients to switch their prescriptions can trigger possible liability under the False Claims Act.

Under the False Claims Act, enrollees in public health insurance programs must be free from unlawful inducements or coercion when choosing healthcare providers. This issue has become increasingly in the spotlight in the wake of several major settlements involving kickbacks and financial arrangements between hospitals and physicians. Along those same lines, offering financial incentives to Medicare or Medicaid enrollees to switch their prescriptions to a certain pharmacy is similarly considered an unlawful inducement and akin to an illegal financial arrangement.

In today’s case, we explore one such arrangement involving mega-retailer Rite Aid and its former program offering gift cards to Medicare and Medicaid patients agreeing to switch their prescription drug plans from their current pharmacy to Rite Aid stores.

Details of Medicare and Medicaid fraud case against Rite Aid

According to the settlement agreement entered into between the Department of Justice and Rite Aid, Rite Aid has agreed to settle allegations of unlawful inducement of Medicaid and Medicare patients through the use of gift cards and cash incentives. The facts of the case are fairly straightforward, but highlight the government’s increasing presence when it comes to improper influence of Medicare and Medicaid enrollees.

The alleged conduct, which involved unlawful inducement of Medicare and Medicaid patients to switch to the Rite Aid pharmacy, occurred between 2008 and 2010 in Rite Aid stores across the United States. The problem was brought to light by a courageous whistleblower who filed his qui tam action against the chain in 2009. In exchange for his willingness to come forward, the relator is set to receive $508,300.

Contents of settlement agreement

In order to settle the matter, Rite Aid  agreed to pay $1.9 million in order to avoid the costs and time commitment of a trial, without admitting any liability. The agreement also sets the $508,300 payment to the relator and holds Rite Aid responsible for the payment of certain legal fees and costs associated with the matter.

Government’s response

The U.S. government issued several statements on the matter. The U.S. Attorney General’s Office remarked:

“This case demonstrates the government’s ongoing commitment to enforcing accountability, transparency, and fairness in the retail pharmacy industry…The government will continue to advocate for the best interests of Medicare and Medicaid patients, and prevent pharmacies from improperly manipulating their healthcare choices.”

Likewise, the U.S. Attorney’s Office stated:

“This settlement holds Rite Aid accountable for exerting undue influence on individuals when they make important healthcare decisions about where and when to fill prescriptions…Corporate profit should never steer an individual away from making the right healthcare decision.”

Last, the Department of Health and Human Services weighed in, stating:

“Pharmacies are not allowed to improperly influence the decision-making of Medicare and Medicaid patients about where to fill prescriptions….Pharmacy chains that manipulate patient choices in this way will be held accountable.”

Contact us to learn more

Do you need a Whistleblower Lawyer or want to know more information about Qui Tam Law and your rights under the False Claims Act?

There are three easy ways to contact our firm for a free, confidential evaluation with one of our whistleblower attorneys:

1. Fill out the contact form on this page.
2. Email [email protected]
3. Call (800) 424-6690

Your submission will be reviewed by a Berger Montague qui tam attorney and remain confidential.