The Justice Department announced that Rite Aid Corporation and 10 subsidiaries have agreed to settle allegations under the False Claims Act (FCA) and Controlled Substances Act (CSA) in United States ex rel. White et al. v. Rite Aid Corp., et al., No. 1:21-cv-1239 (N.D. Ohio). The settlement includes a payment of $7.5 million to the government and an allowed, unsubordinated, general unsecured claim of $401.8 million in Rite Aid’s ongoing bankruptcy case in New Jersey.
Principal Deputy Assistant Attorney General Brian M. Boynton stated, “Filling unnecessary prescriptions for powerful and addictive opioids, as the government alleged here, not only takes a toll on our communities but also violates the law.” He emphasized the Justice Department's commitment to holding pharmacies accountable for their role in the opioid crisis.
U.S. Attorney Rebecca C. Lutzko for the Northern District of Ohio added, “Pharmacies and pharmacists have an affirmative legal duty to ensure that the prescriptions they fill are legitimate... Our settlement with Rite Aid reinforces the Northern District of Ohio’s continued commitment to combatting the opioid crisis.”
The government alleges that from May 2014 through June 2019, Rite Aid dispensed hundreds of thousands of unlawful prescriptions lacking legitimate medical purposes or valid indications. These included prescriptions for highly addictive drugs like oxycodone and fentanyl, often filled despite clear "red flags." Additionally, Rite Aid allegedly ignored substantial evidence from its pharmacists about suspicious prescribers.
The complaint names several Rite Aid subsidiaries as defendants: Rite Aid Hdqtrs Corp.; Rite Aid of Connecticut Inc.; Rite Aid of Delaware Inc.; Rite Aid of Maryland; Rite Aid of Michigan; Rite Aid of New Hampshire; Rite Aid of New Jersey; Rite Aid of Ohio; Rite Aid of Pennsylvania; and Rite Aid of Virginia.
Deputy Inspector General Christian J. Schrank stated that HHS-OIG is entering into a Corporate Integrity Agreement with Rite Aid which includes a prescription drug claims review by an Independent Review Organization.
DEA Administrator Anne Milgram commented on America's ongoing opioid epidemic, noting that "Rite Aid contributed to this crisis by ignoring obvious red flags."
The civil settlement resolves claims that certain Washington State pharmacies violated CSA regulations by filling prescriptions from unauthorized prescribers. It also addresses claims brought under FCA's whistleblower provisions by former employees Andrew White, Mark Rosenberg, and Ann Wegelin.
In addition to financial settlements, agreements with DEA and HHS-OIG outline future obligations for Rite Aid including increased communication with DEA, additional employee training on identifying illegitimate prescriptions, maintaining relevant materials for DEA investigations for five years, and implementing an anonymous hotline for reporting illegal dispensing activities.
This settlement was approved on June 28 by the bankruptcy court as part of Rite Aid’s reorganization plan expected to take effect later this summer. The government's recovery amount will depend on available assets in the bankruptcy estate.
The Civil Division’s Commercial Litigation Branch and U.S. Attorney’s Office for Northern District of Ohio managed this matter with assistance from DEA Cleveland Division, FBI Cleveland Field Office, and HHS-OIG.
Senior Trial Counsel Christopher Wilson led efforts from the Civil Division’s Fraud Section alongside Assistant U.S. Attorneys Patricia Fitzgerald, Elizabeth Berry, Kathryn Andrachik for Northern District Ohio on White matter cases while Trial Attorneys Mary Schmergel, Gregory Werkheiser handled bankruptcy aspects.
Today's announcement underscores government efforts against healthcare fraud using tools like FCA. Reports about potential fraud can be made at 800-HHS-TIPS (800-447-8477).
No determination has been made regarding liability concerning these allegations.