CVS Ordered to Pay $949 Million in Health Care Fraud Qui Tam Case

Whistleblower's Reward Could Top $142 Million

​A federal judge has ordered CVS Health Corp. to pay $948.8 million in damages and penalties after its Omnicare division was found to have submitted millions of false claims to Medicare, Medicaid, and the military's Tricare program — one of the largest False Claims Act judgments in recent years.

The judgment, issued by U.S. District Judge Colleen McMahon in New York, comes in response to a whistleblower lawsuit that alleged Omnicare, the nation’s largest provider of pharmacy services to long-term care facilities, fraudulently dispensed prescription drugs to elderly and disabled patients without valid prescriptions between 2010 and 2018.

Judge McMahon called it a “very big fraud,” imposing a $542 million civil penalty and $406.8 million in treble damages — three times the $135.6 million a jury previously determined the government lost due to Omnicare’s actions.

Whistleblower Uncovered Fraudulent Billing

The case began in 2015 when a former Omnicare pharmacist filed a qui tam lawsuit under the False Claims Act. The whistleblower alleged that Omnicare, which CVS acquired in 2015, had improperly billed government healthcare programs for prescriptions that were never lawfully authorized.

The federal government joined the case in 2019, and a jury ruled in favor of the government earlier this year. According to court documents, Omnicare submitted more than 3.3 million false claims over the eight-year period. The whistleblower, under the False Claims Act, stands to receive a significant portion of the recovery — potentially more than $142 million dollars.

​CVS has denied the allegations and said it would appeal the ruling. In a statement, the company said the case “centered on a highly technical prescription dispensing record-keeping issue that was allowed by law in many states.”

CVS also argued that the nearly $949 million penalty was excessive and unconstitutional. But Judge McMahon dismissed those arguments, stating that the fine was appropriate given the scale and duration of the misconduct. “Admittedly, it is a very big number. But this was a very big fraud on the Government, one that lasted over almost a decade,” she wrote in her order.

Penalty Could Have Been Higher

​While nearly $949 million is a staggering figure, McMahon noted that the government could have sought far more under the letter of the False Claims Act. With a statutory minimum penalty of $5,000 per false claim, the judge calculated that Omnicare’s 3.3 million false claims could have triggered a minimum penalty of approximately $26.9 billion — on top of the damages.

“The court’s decision not to impose the maximum possible penalty should not obscure the seriousness of this fraud,” said one legal expert. “It reinforces that government healthcare programs are not a blank check and that companies will be held accountable for systemic abuse.”

A Landmark Case for Health Care Fraud Whistleblowers

​The case marks a significant victory for the U.S. Department of Justice and reinforces the power of the False Claims Act as a tool to combat healthcare fraud. Under the law, private individuals can file suit on behalf of the government and receive a share of the recovery — a provision designed to incentivize whistleblowers to come forward with insider information.

In fiscal year 2023, the Justice Department recovered more than $2.7 billion in False Claims Act cases, with healthcare-related fraud accounting for the majority. This latest ruling adds to that momentum and sends a clear message: even the largest healthcare corporations are not above the law.

Whistleblower advocates are hailing the decision as a landmark moment in the ongoing fight against healthcare fraud.  “This case is a textbook example of why whistleblower laws matter,” said a spokesperson for the nonprofit Taxpayers Against Fraud. “Thanks to one person who had the courage to speak up, the government was able to expose years of wrongdoing and recover hundreds of millions of taxpayer dollars.”

Do You Qualify as a Whistleblower?

If you have evidence that a health care provider or organization is submitting false claims to Medicare, Medicaid, or other government health care programs, you may be entitled to a financial reward and legal protections as a whistleblower. 

Call John Howley, Esq. today at 212-601-2728 to schedule a free and confidential consultation with an experienced whistleblower lawyer.