Back in December 2019, the United States Attorney’s Office for the Southern District of New York (USAO-SDNY) announced that it had filed a lawsuit under the False Claims Act (FCA) against CVS Health and its subsidiary, Omnicare, “for fraudulently billing federal healthcare programs for hundreds of thousands of non-controlled prescription drugs dispensed based on stale, invalid prescriptions to elderly and disabled individuals.” According to the government’s press release announcing the lawsuit, the beneficiaries at issue were in assisted living facilities, group homes, independent living communities, and other non-skilled residential long-term care facilities, and the “illegally dispensed drugs” included antipsychotics, anticonvulsants, and antidepressants. The government’s lawsuit alleged that when a patient’s prescription expired or ran out of refills, instead of obtaining new prescriptions, Omnicare would simply assign a new number to the old prescription and keep on dispensing the drugs, which Omnicare called “rollover prescriptions.”
On April 29, 2025, the USAO-SDNY announced that after a four-week trial, a jury found CVS and Omnicare liable for submitting over 3 million false claims resulting in over $135 million in damages. On July 7, the district judge imposed a total judgment of $949 million. As required by the FCA, the court trebled the jury’s verdict to $406.8 million and then imposed an additional $542 million in penalties. The judge rejected the defendants’ argument that the penalties violated the Eighth Amendment’s Excessive Fines Clause, noting that the judgment (approximately 7 times actual damages) was significantly lower than it would have been had the court applied even the minimum per-claim penalties which – given the jury’s finding of 3.3 million false claims – would have been $26.9 billion. United States ex rel. Bassan v. Omnicare, Inc., No. 15 Civ. 4179 (CM) (S.D.N.Y. July 7, 2025).
The CVS/Omnicare lawsuit was originally filed under the FCA’s qui tam whistleblower provisions by pharmacist Uri Bassan who worked for Omnicare from 2007 until August 2016. Because the government intervened in the case, Mr. Bassan is entitled to anywhere between 15 and 25% of the total judgment, which would be between $142 million and $237 million if the judgment stands.
After the verdict was announced in April, Omnicare released a statement stating that the lawsuit was “centered on a highly technical prescription dispensing record keeping issue that was allowed by law in many states” and that “there was no claim in this case that any patient paid for a medication they shouldn’t have or that any patient was harmed.” Omnicare said that they would appeal the verdict.
The CVS/Omnicare verdict and post-verdict judgment demonstrate the astronomical risks that healthcare entities and providers face under the FCA, which authorizes treble (3x) damages plus civil penalties that, adjusted for inflation, now range from $14,308 to $28,619 per false claim. These per-claim penalties mean that even in cases where the actual damage suffered by the government is relatively low, an FCA defendant could still face an enormously high final judgment. Because of these risks, the majority of FCA cases settle before reaching litigation, let alone trial.
However, various courts have been willing to reduce FCA verdicts under the Eighth Amendment’s Excessive Fines Clause. (see our previous article on that topic.) These cases give FCA defendants and counsel defenses to raise when facing excessive penalties, particularly where there is a greater-than-single digit ratio of penalties to actual damages.
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The attorneys at Chilivis Grubman represent businesses and individuals in connection with False Claims Act investigations and litigation. If you need assistance with such a matter please contact us.