Last week, Rite Aid, America’s third largest retail pharmacy after CVS and Walgreens, settled two massive whistleblower cases, agreeing to pay potentially upwards of $500 million to resolve disparate allegations of healthcare fraud.
Last Wednesday, the Department of Justice announce that Rite Aid will pay up to roughly $410 million to resolved allegations that the company violation both the Controlled Substances Act and the False Claims Act. Rite Aid has been in Chapter 11 bankruptcy proceedings since 2023, and has closed thousands of stores since 2017, resultingly $401 million of the payment is an unsecured claim in the company’s bankruptcy proceeding.
The underlying allegations were that, for the better part of the last decade, Rite Aid dispensed hundreds of thousands of unlawful opioid prescriptions. Whistleblowers and the government alleged that these prescriptions were medically unnecessary, were not issued in the usual course of medical practice, and that Ride Aid ignored red flags, or warning procedures that pharmacists were, or should have been, trained to recognize. Rite Aid also allegedly ignored warnings from its employees concerning the excessive prescribing of opioids, continuing to fill prescriptions and collect payments from Medicare and Medicaid for them.
This case was brought by three whistleblowers, Andrew White, Mark Rosenberg, and Ann Wegelin. All three are former employees of Rite Aid. White was a pharmacist, and later pharmacy manager in North Carolina, Rosenberg was a pharmacy technician in West Virginia, and Wegelin was a pharmacist, and later pharmacy manager in Pennsylvania. The whistleblowers filed their case in 2019 and, as a reward under the False Claims Act, will receive 17% of any recovery the government ends up making.
This is just the latest example of whistleblowers holding companies accountable for violations related to America’s opioid crisis, notably resulting in past settlements with opioid manufacturers Insys and Purdue Pharma.
The same day as news broke of the Rite Aid’s opioid dispensing settlement, the Department of Justice also announced a settlement between the US and Rite Aid concerning allegations of falsely reporting drug rebates, agreeing to pay, along with an insurer called Elixir, up to $101 million to resolve these allegations. Part of the payment is again subject to Rite Aid’s bankruptcy proceedings.
This settlement resolves allegations that Rite Aid and Elixir failed to meet their obligations to report drug manufacturer rebates to the government, rendering government payors ineligible to benefit from those rebates. Instead of reporting these rebated, Rite Aid and Elixir allegedly kept the money to benefit their bottom lines, and did not pass their savings along to taxpayers, violating the law. This case was also brought by a whistleblower, Glenn Rzeszutko.
If you’re aware of any violations involving the dispensing of opioids that government dollars (Medicare, Medicaid, TRICARE, etc.,) financed, or failure to pass on any drug cost savings to these programs, you may be eligible to be a whistleblower under the False Claims Act. Please contact Whistleblower Partners today.
