National retail drugstore chain Rite-Aid has paid the U.S. nearly $3 million to resolve whistleblower allegations brought under the False Claims Act that it used gift cards to manipulate Medicare and Medicaid beneficiaries into transferring their prescriptions to Rite-Aid.
The Department of Justice said Wednesday that from 2008 to 2010 Rite Aid engaged in an “illegal” and “inappropriate” scheme to use gift cards as a way to lure new business to its stores from those who rely on government-funded health care programs. The company settled the allegations for $2.99 million.
“Pharmacies are not allowed to improperly influence the decision-making of Medicare and Medicaid patients about where to fill prescriptions,” said Health and Human Services Special Agent Glenn Ferry. “Pharmacy chains that manipulate patient choices in this way will be held accountable.”
The Justice Department said that offering gift cards to Medicare and Medicaid beneficiaries, many of whom are on tight budgets, in exchange for their prescription business exerted “undue influence on individuals when they make important health care decisions about where and when to fill prescriptions.”
The case was brought by Jack Chin, a Florida pharmacist, under the qui tam, or whistleblower provisions of the False Claims Act, which authorizes private parties to sue for fraud on behalf of the federal government and share in the recovery. Mr. Chin will receive approximately $508,300 of the settlement, the Justice Department said.
The Associated Press reported that Rite Aid, based in Camp Hill, Penn., “denies the allegations but is pleased to resolve the matter and avoid more litigation.”