Shoppers exit a Safeway grocery store in Seattle, Washington, U.S. March 19, 2020. REUTERS/Jason Redmond

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(Reuters) - A divided appeals court panel ruled Tuesday that Safeway Inc did not defraud the government by reporting "usual and customary" prices to Medicare and Medicaid that did not reflect discounts offered to customers on prescription drugs.

In a 2-1 opinion, the 7th U.S. Circuit Court of Appeals found Safeway was acting under a reasonable interpretation of the law when it billed the government for higher prices than those it charged uninsured customers.

The ruling upheld a lower court's grant of summary judgment for the company against pharmacist Thomas Proctor, who filed a whistleblower lawsuit against Safeway under the False Claims Act in 2011 in Springfield, Illinois federal court.

Lawyers for Proctor and Safeway could not immediately be reached for comment.

According to Proctor's lawsuit, Safeway from 2006 to 2015 charged the government list prices for prescription drugs even though most cash-paying customers were charged lower prices through competitor matching and loyalty programs.

In 2016, the 7th Circuit ruled in U.S. ex rel. Garbe v. Kmart Corp that a similar practice by Kmart violated the...

Read Full Story: https://www.reuters.com/legal/litigation/safeway-beats-whistleblower-lawsuit-...