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Justice News

Department of Justice
U.S. Attorney’s Office
Central District of California

Wednesday, December 3, 2014

Rite Aid Corporation Pays $2.99 Million For Alleged Use Of Gift Cards To Induce Medicare And Medicaid Patients To Transfer Prescriptions

LOS ANGELES – Rite Aid Corporation has paid the United States $2.99 million to resolve allegations that it violated the False Claims Act by inappropriately using gift cards as inducements, the Department of Justice announced today. 

The settlement resolves allegations that Rite Aid offered illegal inducements to Medicare and Medicaid beneficiaries to transfer their prescriptions to Rite Aid pharmacies. The government alleged that, from 2008 to 2010, Rite Aid knowingly and improperly influenced the decisions of Medicare and Medicaid beneficiaries to transfer their prescriptions to Rite Aid pharmacies by offering them gift cards in exchange for their business.

“This settlement holds Rite Aid accountable for exerting undue influence on individuals when they make important healthcare decisions about where and when to fill prescriptions,” said Acting U.S. Attorney Stephanie Yonekura. “Corporate profit should never steer an individual away from making the right healthcare decision.”

Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division stated: “This case demonstrates the government's ongoing commitment to enforcing accountability, transparency and fairness in the retail pharmacy industry. The government will continue to advocate for the best interests of Medicare and Medicaid patients, and prevent pharmacies from improperly manipulating their healthcare choices.”

The settlement, which was announced today after a federal judge last week unsealed part of the case, resolves allegations filed by a Florida pharmacist under the qui tam, or whistleblower provisions of the False Claims Act, which authorizes private parties to sue for fraud on behalf of the United States and share in the recovery.

“Pharmacies are not allowed to improperly influence the decision-making of Medicare and Medicaid patients about where to fill prescriptions,” said Special Agent in Charge Glenn R. Ferry for the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).  “Pharmacy chains that manipulate patient choices in this way will be held accountable.”

Rite Aid is a Delaware corporation and national retail drugstore chain with its principal place of business in Camp Hill, Pennsylvania,

This case was investigated jointly by the United States Attorney’s Office, the Commercial Litigation Branch of the Justice Department’s Civil Division, the National Association of Medicaid Fraud Control Units and HHS-OIG.

The claims settled by today’s agreement are allegations only and there has been no determination of liability.

Release No. 14-155

Updated June 22, 2015