3 Major Retailers Won’t Face False Claims Act Suit

Three of the world’s largest retailers have avoided a potential False Claim Act lawsuit, after claims surfaced that Wal-Mart Stores Inc., Kmart Corp. and Rite Aid Corp. had charged the federal Medicare and Medicaid programs for expired or almost-expired prescription medications.

U.S. District Court for Massachusetts Judge Patti Saris dismissed nearly all of the qui tam claims from Maine attorney William Verrinder. According to the judge, Verrinder failed to effectively outline the nature of the alleged wrongdoing. Judge Saris wrote in her ruling that the plaintiff did not submit a single example of the retailers actually billing the government for the expired drugs — only that there were some prescription vials that had been mislabeled or misbranded.

In court documents, the retailers did admit that its processes included machines that labeled bottles with expiration dates that were one year away, even if the drug was set to expire within a month. However, they also claimed that they had systems in place to ensure prescriptions were properly labeled by the time they reached consumers, and that no drugs were placed on shelves after expiring.

The judge did allow one claim to stand, however: that Kmart had combined cheaper generics with more expensive name-brand drugs at some of its North Carolina pharmacies — later charging government programs for the higher-priced varieties. This was because Verrinder was able to provide details on where and when the false claim took place. However, the judge asked him to provide more information within 30 days to avoid this claim being dismissed, as well.

When a company is accused of wrongdoing, it’s important for corporate leaders to respond quickly and effectively. If you would like further guidance on how to best approach these issues within your organization, speak with a trusted Dallas attorney at Whistleblower Law for Managers today.