Abingdon, Virginia — K-VA-T Food Stores Inc., operating as Food City, has agreed to pay $8,488,378 to settle allegations that it violated the False Claims Act (FCA) by improperly dispensing opioids and other controlled substances at its pharmacies. The settlement also includes an additional payment of $78,621 to the states of Virginia and Kentucky for claims paid to the grocery chain by state Medicaid programs.
The government’s investigation found that, from January 1, 2011, through December 31, 2018, Food City pharmacies across 24 locations dispensed opioids and other controlled substances that were medically unnecessary, lacked a legitimate medical purpose, or were not supported by valid prescriptions. The alleged misconduct resulted in false claims being submitted to federal healthcare programs, including Medicare and Medicaid.
“Pharmacies that fill prescriptions for opioids and other controlled substances have an obligation to ensure that those prescriptions are medically necessary,” said Brian M. Boynton, Principal Deputy Assistant Attorney General of the Justice Department’s Civil Division. “The department is committed to holding accountable pharmacies that have abdicated this responsibility and thereby contributed to the nation’s opioid crisis.”
Settlement Reached Following Whistleblower Lawsuit
The settlement resolves claims brought under the qui tam provisions of the False Claims Act, which allows private parties, known as whistleblowers, to file lawsuits on behalf of the government and share in the recovery. The K-VA-T Litigation Partnership, LLP, filed the whistleblower action against Food City, and will receive $1,527,908 from the settlement.
“We are pleased that this settlement will help address the harm caused by the improper dispensing of opioids,” said U.S. Attorney Francis M. Hamilton III for the Eastern District of Tennessee. “When pharmacies fill prescriptions without regard to their medical legitimacy, they contribute to the opioid epidemic and endanger the health of individuals and communities.”
A Coordinated Effort to Tackle the Opioid Crisis
The settlement is part of a broader effort by federal, state, and local law enforcement to hold accountable pharmacies and other entities that contribute to the opioid crisis. Kelly J. Blackmon, Special Agent in Charge of the Department of Health and Human Services Office of Inspector General (HHS-OIG), emphasized the importance of ensuring only legitimate prescriptions are dispensed.
“This case underscores HHS-OIG’s dedication to addressing the nation’s opioid overdose crisis and ensuring that only legitimate, medically necessary prescriptions are dispensed,” said Blackmon.
The Office of Personnel Management’s Inspector General, Derek M. Holt, also commented on the severity of the issue, stating, “The opioid epidemic continues to significantly impact the nation, devastating families across our country. We applaud our law enforcement partners for their work to hold pharmacies accountable for actions that could exacerbate the epidemic.”
The settlement also highlights the impact on military health programs. Darrin K. Jones, Special Agent in Charge of the Department of Defense Office of Inspector General’s Defense Criminal Investigative Service (DCIS), stressed the risk to military personnel and their families.
“Dispensing medically unnecessary opioids and other controlled substances to our beneficiaries puts them at great risk,” said Jones. “We will continue to hold pharmacies accountable to ensure that we are delivering the very best health benefit to those who serve, or have served, our nation.”
Resolution of False Claims Act Allegations
The United States alleged that Food City’s pharmacies dispensed controlled substances that lacked proper medical justification or were dispensed without valid prescriptions, in violation of the False Claims Act. The company’s actions led to the submission of false claims to government programs, which were ultimately resolved through this settlement.
In addition to the monetary settlement, Food City has agreed to implement comprehensive measures to improve its controlled substance dispensing practices and ensure future compliance with applicable laws and regulations.
The settlement was the result of a coordinated investigation led by the Justice Department’s Civil Division, Fraud Section, and the U.S. Attorney’s Office for the Eastern District of Tennessee, with assistance from the Department of Health and Human Services Office of Inspector General (HHS-OIG) and the Defense Criminal Investigative Service (DCIS).
This settlement sends a strong message to pharmacies and healthcare providers across the country about the importance of adhering to laws and regulations governing the dispensing of controlled substances. Chief Edward C. Norton Jr. of the Defense Health Agency’s Pharmacy Operations Division also underscored the commitment to ensuring safe and appropriate care for military personnel.
“TRICARE is committed to providing safe, effective, and appropriate care to our warfighters, retirees, veterans, and their families,” said Norton. “We will continue to hold pharmacies accountable for abiding by these standards to ensure we are delivering the very best health benefit to those who serve, or have served, our nation.”
