$3.5M Settlement in Walgreens Healthcare Fraud Case

qui tam whistleblower litigation and False Claims Act litigation

Walgreens ignored Wisconsin’s medically appropriate treatment restrictions and billed Medicaid for medically unnecessary drugs, False Claims Act case reveals.

DALLAS –– Retail pharmacy giant Walgreen Co. (Walgreens) has agreed with the Wisconsin Department of Justice, the United States Department of Justice, and Whistleblower Loyd F. Schmuckley, Jr. to settle civil allegations of false claims fraud for $3.5 million. Whistleblower “Skip” Schmuckley, who is represented by attorneys Paul Lawrence and Charles Siegel of Waters & Kraus LLP, of Dallas, brought a qui tam lawsuit in California in 2011 and a portion of the case was transferred to Wisconsin in 2017 after settlement of similar claims on behalf of the state of California. Mr. Schmuckley alleged that Walgreens ignored its obligations under the Wisconsin Medicaid program to dispense certain stimulant drugs to Medicaid beneficiaries only if the pharmacy verifies with the prescribing physicians that the medication has been prescribed for a diagnosis for which reimbursement is permitted under the Medicaid program.

Mr. Schmuckley, a career pharmacist, worked for the pharmacy chain for two and a half years beginning in 2008. He alleges that time constraints, quotas, and other pressures placed upon Walgreens pharmacists to meet the pharmacy’s corporate goals made it impossible for them to properly serve the safety and health needs of patients or the fiscal interests of Wisconsin’s Medicaid program according to professional standards mandated by the law. Walgreens’ corporate policies requiring prescriptions be dispensed within 10 minutes of hitting the pharmacy’s computer system also made it impossible to follow the law. There was no time for pharmacists to verify the diagnosis for beneficiaries receiving certain stimulant drugs for which the Wisconsin Medicaid program will pay only for certain diagnoses. As a result, it is alleged that Walgreens dispensed and billed Wisconsin Medicaid for diagnosis restricted drugs that did not satisfy the required diagnosis.

The settlement agreement between Walgreens, the government, and the whistleblower, was announced by the Wisconsin Department of Justice on Jan. 23, 2019.

Mr. Schmuckley’s whistleblower case was originally filed under seal in the Northern District of California on September 23, 2011, and a portion of the case was transferred to the Eastern District of Wisconsin on April 21, 2017, after similar California claims were settled. Whistleblower “Skip” Schmuckley will be rewarded with 23% of the settlement and will share a portion of that with an anonymous John Doe whistleblower who filed a similar case after Mr. Schmuckley’s case was filed. Under the False Claims Act, only the first-to-file whistleblower is entitled to an award, but whistleblowers often work out arrangements to share any reward when multiple cases have been filed.

The case is United States of America et al. ex rel. Schmuckley v. Walgreens Co.; Case No 2:17-CV-570, U.S. District Court for the Eastern District of Wisconsin, but was originally filed under Case No. CV 11-4742 MEJ in the United States District Court for the Northern District of California, San Francisco Division.

About Waters & Kraus

Waters & Kraus is a national plaintiffs’ firm with lawyers practicing qui tam whistleblower litigation and False Claims Act litigation nationwide from primary offices in Dallas, Texas, and Los Angeles, California, with satellite offices on the east coast and elsewhere. Our attorneys represent whistleblowers exposing fraud against the government in a variety of healthcare matters, including off-label or false marketing of medical devices and drugs, retail pharmacy DUR and diagnosis restriction fraud, hospital domestic-care fraud, hospital wage index fraud, skilled nursing facility resource utilization group (RUG) and productivity quota fraud, long-term care hospital (LTCH) fraud, intensive rehab facility (IRF) fraud, hospice facility fraud, mobile imaging facility fraud, and medical provider kickback fraud. Contact us at 800.226.9880 to learn more about our practice and our qui tam attorneys.

Waters Kraus Paul & Siegel is the West Coast practice of Waters & Kraus, LLP, a national plaintiffs’ law firm.

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