CVS Health subsidiary Omnicare has filed for Chapter 11 bankruptcy due to issues related to its recent litigation in the U.S. District Court for the Southern District of New York, the company said this week.
A federal judge in July determined that Omnicare had illegally charged the U.S. government for prescription drugs and ordered it to pay more than $948 million in damages and penalties. Omnicare filed more than 3.3 million false claims between 2010 and 2018, in violation of the False Claims Act, according to court documents.
The original lawsuit had been filed by a former Omnicare pharmacist, who had accused the pharmacy benefit manager (PBM) of improperly billing Medicare, Medicaid and the Tricare military program for more than $135 million in drugs that weren’t covered.
The Chapter 11 agreement is for $110 million in debtor-in-possession (DIP) financing. Once the court gives the go-ahead, the company expects the financing to provide enough liquidity for it to meet its ongoing business obligations during the process.
Omnicare said it will use the Chapter 11 process to address other financial challenges facing the long-term care pharmacy industry and will potentially mull restructuring options. That could include anything from standalone restructuring to outright sale.
The company said it will seek authorization from the court to continue its operations during the Chapter 11 proceedings. To that end, it said it would meet its commitment to stakeholders, including...
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