Ky. A.G. Notes Medicaid Recovery Following Settlement

June 30, 2004

Kentucky Attorney General Greg Stumbo and the National Association of Medicaid Control Units (NAMFCU) announced that 30 state Medicaid Programs recovered more than $6.6 million dollars as a result of a settlement with Rite Aid Corporation.

Rite Aid, a national retail pharmacy chain, agreed to pay a total of $7 million to the federal and state governments to settle allegations under the federal False Claims Act. The company is alleged to have dispensed partial or “short” prescriptions due to insufficient stock and returned unfilled medications to stock, but received full payment from government health insurance programs (Medicaid, Tricare and the Federal Employee Health Benefit program). The Commonwealth of Kentucky’s Medicaid Program recovered a total of $417,753.32 with $50,835.37 being the state share.

NAMFCU, representing the 47 state Medicaid Fraud Control Units and the District of Columbia, worked closely with numerous federal agencies, including the United States Department of Justice, and the Office of Inspector General (OIG) of the United States Department of Health and Human Services (HHS), to reach this global settlement. The agreement covers the time period of Jan. 1, 1997 to Dec. 31, 2001 and settles a dispute with Rite Aid originally brought as qui tam cases in federal courts in Pennsylvania and South Carolina.

“Taking action to recoup Medicaid dollars in state and federal court is a priority of my office,” said Attorney General Stumbo. “Recovering these funds is one example of how the attorney general can assist Kentucky in managing its current budget crisis.”

The Rite Aid settlement includes a Corporate Integrity Agreement (CIA) that will be administered by the HHS/OIG. The CIA requires the company to modify its pharmacy billing operations to ensure future compliance with applicable laws and Medicare and Medicaid regulations, to monitor these practices for problems, and establishes sanctions for any violations.

With the Rite Aid settlement, the Commonwealth has recovered $7,123,804.60 for its Medicaid program this year. This figure includes settlements with Bayer, HCA Columbia and Kindred Nursing Centers Limited Partnership.

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