Law360, Washington (October 31, 2014, 12:51 PM ET) — Walgreen Co. is asking a Tennessee federal judge to throw out a False Claims Act suit over its alleged use of gift cards to induce Medicare and Medicaid recipients to switch pharmacies, arguing that the complaint addresses issues that have already been settled with the government.
The nation’s largest drug retailer said Wednesday that the gift card allegations from two earlier suits from Michigan and California were resolved in a $7.9 million federal settlement in 2012, and that the False Claims Act prevents plaintiffs from bringing claims that the government has already addressed.
Because the government’s interests have already been adequately represented, the qui tam action filed by relator Andrew Hirt earlier this year cannot move forward, according to Walgreen.
“As the government was a party in both of these previous qui tam actions, the only question is whether this third qui tam is based upon the same allegations or transactions,” the motion says. “Here, the answer is clearly ‘yes.’”
Hirt lodged his complaint against Walgreen in August, accusing the company of violating the FCA by providing $25 gift cards to beneficiaries of Medicaid and Medicare in order to lure them to Walgreen. The U.S. decided not to intervene in the case.
Walgreen claims in its dismissal motion that Hirt’s allegations are based on content that was already disclosed to the public, violating the FCA’s rule that the fraud must be originally exposed by the relator.
“Far from containing any major — or even minor — new allegations, [Hirt’s] allegations of Walgreens offering $25 gift cards to federal beneficiaries as an improper inducement for the transfer of prescriptions is an identical allegation to the qui tams described in the government’s press release and the publicly available Michigan qui tam,” the motion says.
The 2012 settlement came after the government alleged that Walgreen offered the gift cards — as well as gift checks and other promotional items — to members of several government health care programs, including Medicare, Medicaid, TRICARE and the Federal Employees Health Benefits Program, when they transferred their prescriptions.
Walgreen’s ads promoting the gift cards typically acknowledged that the offer wasn’t valid for any government health care program, yet company employees frequently ignored the stated exemptions on the coupons and gave them to customers who belonged to government health programs, the U.S. Department of Justice said.
Former Walgreen pharmacy technician Cassie Bass lodged a qui tam suit against the company in Michigan federal court in 2008, and independent pharmacist Jack Chin launched a similar suit in California federal court in 2009. Bass and Chin will receive a combined $1.3 million for their whistleblowing efforts, the government said.
Counsel for Hirt was not immediately available for comment Friday.
Hirt is represented by G. Kline Preston IV of Kline Preston Law Group PC.
The case is United States of America ex rel. Andrew Hirt v. Walgreen Co., case number 3:13-cv-00870, in the U.S. District Court for the Middle District of Tennessee.
–Additional reporting by Keith Goldberg. Editing by Rebecca Flanagan.