Federal and Tennessee prosecutors adequately alleged that Walgreen Co. violated the False Claims Act by falsifying patient records in order to improperly receive millions of dollars worth of Hepatitis C medication payments from Medicaid, a Tennessee district court said.
The plaintiffs say Walgreens, acting through store manager and pharmacist Amber Reilly, knowingly submitted or caused to be submitted materially false information to TennCare for dozens of enrollees who lacked eligibility for Medicaid reimbursement.
Walgreens argued that it can’t be vicariously liable under the FCA because plaintiffs didn’t show the company knew about allegedly fraudulent actions while they were taking place.
But a corporation can be vicariously liable under the FCA when it benefits from the fraud of a managerial agent who is acting within the scope of her employment, Judge J. Ronnie Greer of the U.S. District Court for the Eastern District of Tennessee said in the Monday opinion.
The complaint also adequately alleged Reilly’s misconduct with “meticulous details,” and that Walgreens should have known it was obligated to return overpayments to the government, the court said.
The complaint adequately alleged actual knowledge of the obligation given “the widescale fraud that occurred under Walgreen’s own roof” and the “huge upsurge in revenue that accompanied the fraud,” the court said.
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