Walgreens Seeks Dismissal of False Claims Act Allegations Involving Gift Cards

Walgreens Seeks Dismissal of False Claims Act Allegations Involving Gift Cards

One of the key requirements of a False Claims Act lawsuit is that it be based on original information that has not been previously disclosed via litigation, a government investigation, or through the news media. As such, it is not uncommon for defendants facing False Claims Act liability to initially motion for a dismissal under this rule, often pointing to similar litigation or settled cases occurring in other jurisdictions. In order for this type of motion to be successful, the judge must find that the whistleblower’s allegations hinge on the same, or substantially similar, facts as those alleged in a prior whistleblower lawsuit and it would be unfair for the whistleblower to collect a reward based on information discoverable by the general public.

In today’s case, we discuss a recent motion to dismiss by pharmacy giant Walgreens, Inc., after a whistleblower alleged that Walgreens improperly induced Medicare and Medicaid patients to switch pharmacies by offering $25.00 gift cards. The case, which was filed in United States District Court for the Middle District of Tennessee, is allegedly similar to two other settled cases out of Michigan and California – and Walgreens is seeking a dismissal based on a lack of original information.

Details of case against Walgreens

The case against Walgreens, which is in procedural infancy, was filed by whistleblower Andrew Hirt in early 2014. Allegedly, Walgreens was offering prescription drug customers gift cards for store purchases if they would agree to fill prescriptions at a Walgreens pharmacy as opposed to a competitor. The allegations also assert that Walgreens offered customers “gift checks and other promotional items,” despite stating on the advertisements that the offer was not valid in conjunction with any government healthcare program. Nonetheless, the relator asserts that members of Medicare, Medicaid, TRICARE, and Federal Employees Health Benefits Program were offered incentives in exchange for their decision to transfer their prescriptions to Walgreens.

Walgreens seeks dismissal

In 2008, federal district courts in both Michigan and California presided over similar False Claims Act lawsuits involving the use of gift cards as an inducement to transfer prescriptions from a competitor to the Walgreens pharmacy. As such, Walgreens hinges its argument on the contention that the relator’s claims do not stem from “original information,” and must be dismissed. More specifically, the defendant’s motion to dismiss states that, “Far from containing any major — or even minor — new allegations, [the relator’s] allegations of Walgreens offering $25 gift cards to federal beneficiaries as an improper inducement for the transfer of prescriptions is an identical allegation to the qui tams described in the government’s press release and the publicly available Michigan qui tam…. ” Defendants further countered the relators contentions by stating, “As the government was a party in both of these previous qui tam actions, the only question is whether this third qui tam is based upon the same allegations or transactions….Here, the answer is clearly ‘yes.’”

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By |2019-02-18T16:04:37-05:00December 16th, 2014|Healthcare Fraud|