Texas-Based Grocery Store H-E-B Settles Medicaid Fraud Case for $12 Million

The San Antonio-based grocery store H-E-B was recently involved in an extensive Medicaid fraud case involving several in-store pharmacies across the Texas area. The case was filed in 2011 by three pharmacists who, while not employees of H-E-B, worked in other states filling prescription orders for the company. The contents of the complaint and settlement were unsealed earlier this month and whistleblowers are poised to receive approximately $2 million for their role in bringing this type of fraud to light.

According to allegations, H-E-B routinely overbilled for prescriptions filled for Medicaid patients, resulting in millions of dollars in false claims submitted to the Texas and U.S. governments – both of whom will split the approximately $10 million settlement. Under the applicable laws, Medicaid must reimburse pharmacies for disbursing medication to beneficiaries according to the lesser of two calculations: (1) the usual and customary price charged to the consumer for the drug, or; (2) a reasonable acquisition and dispensing fee as determined by the Medicaid program.

The trouble emerged when it was revealed that non-Medicaid patients were enjoying reduced or discounted prices for drugs under H-E-B’s “Rx Rewards Platinum” program. These savings were not offered to Medicaid patients and invoices were submitted to Medicaid for inflated amounts. Under the program, customers could receive a 30-day supply of certain medications for just $5, whereas Medicaid patients were charged the full amount. For example, non-Medicaid patients could receive a monthly dose of the cholesterol drug Pravastatin for just $5 under the program, whereas H-E-B billed Medicaid $49.99 to provide the same drug to Medicaid patients.

The Texas Attorney General was pleased with the results of the case and revealed H-E-B’s willingness to work quickly and amicably with authorities to reach a settlement. Counsel for whistleblowers commented that several of these types of cases are ongoing across the nation and the case against H-E-B is one of the first to settle.

H-E-B, through its spokesperson, has denied any wrongdoing in the matter and stated that “the settlement relates to the interpretation of a specific regulatory requirement that applies only to the Texas Medicaid program….While the interpretation of this regulation is not free from doubt, we agreed to resolve this matter in the best interests of our state and H-E-B.” H-E-B further reiterated that the amount in conflict represents a mere one percent of all transactions between the pharmacy and Texas Medicaid.

Basics of Medicaid Fraud

Medicaid fraud is one of the most common forms of healthcare fraud in the United States. One of the reasons why providers are able to defraud Medicaid is due to the sheer amount of transactions occurring daily and the impossibility of federal and state oversight in all business practices. The government relies on the integrity and honesty of whistleblowers to come forward and report what they have seen in order to regulate the system. As a Medicaid fraud whistleblower, you could stand to gain up to 30 percent of the ultimate settlement or verdict in your case.

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