LOS ANGELES (CN) - Walgreen will pay $7.9 million to settle federal allegations that it lured Medicare and Medicaid patients with gift cards and discounts at its stores, causing the federal and state governments to pay false claims.
The settlements came after federal judges unsealed two whistleblower complaints, filed in Los Angeles and Detroit, by pharmacists Cassie Bass and Jack Chin.
Walgreens did not admit wrongdoing or liability. The settlement resolves allegations that it offered gift cards and other incentives to lure Medicare and Medicaid customers from competitors.
Walgreens allegedly offered discounts through a Prescription Savings Discount Club, $10 discount checks, $20 discount checks, $25 gift card coupons, and $50 coupon brochures, according to the complaint in Detroit from Bass, the United States and Michigan.
The government claims the kickbacks caused it to pay for unneeded prescriptions, gave Walgreens an unfair competitive advantage, and encouraged patients to make choices based upon discounts, rather than legitimate health care needs.
Walgreens stated in ads that the discounts were not valid for recipients of government-funded healthcare, but its employees ignored the exemptions, according to the complaint.
Bass's whistleblower complaint claimed that 90 percent of customers who used the incentives were recipients of government-funded health care programs, and that only 10 percent had private health insurance. The False Claims Act complaints claim Walkgreen defrauded Medicare, Medicaid, TRICARE and the Federal Employees Health Benefits Program.
Bass and Chin will share $1,277,172 for blowing the whistle. Bass worked as a Walgreen pharmacy tech in Detroit. Chin learned of the scheme as an independent pharmacist in Florida.
The federal portion of the settlement is $7,298,124.
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