A Lost Cause: Jury Finds CVS Caused the Submission of False Claims by Subsidiary Omnicare

On April 29, 2025, a federal jury in the Southern District of New York found Omnicare liable for illegally dispensing drugs to elderly and disabled people in long-term care facilities without legitimate prescriptions. A unanimous jury concluded that Omnicare, the largest long-term care pharmacy in the United States, fraudulently billed Medicare, Medicaid, and TRICARE, a government military healthcare program, for more than three million false claims totaling more than $135 million in damages — one of the largest jury verdicts ever in an FCA case. If trebled, damages could reach more than $400 million, plus penalties. In addition, the jury determined that Omnicare’s parent company, CVS Health Corporation (CVS), which acquired Omnicare in 2015, caused the false claims to be submitted.

The relator, an Omnicare pharmacist, filed suit in 2015, and in 2019 the federal government, 29 states, and the District of Columbia intervened. The four-week jury trial began on April 1, 2025. The government alleged that Omnicare dispensed drugs to individuals in assisted living and other long-term residential facilities that were not supported by valid prescriptions under state law and then submitted claims for reimbursement for those prescriptions to the federal healthcare programs. The government further alleged that CVS “caused” the claims to be submitted, as it was aware of deficiencies in Omnicare’s practices but failed to correct them. CVS focused its defense heavily on a materiality argument, arguing that the practice at issue was allowed by law in many states and accepted by the Centers for Medicare & Medicaid Services.

After the government rested its case, CVS filed a motion for a directed verdict, arguing that the government failed to satisfy its burden that CVS “caused” the false claims to be submitted. Judge McMahon reserved judgment on the motion, finding that there was enough evidence for the jury to determine false claims liability for CVS. Specifically, she found the evidence showed that CVS “had ultimate oversight over Omnicare’s compliance with Government program regulations — indeed, was required to do so by virtue of the [Corporate Integrity Agreement]” that CVS had entered into in 2016 related to different conduct by Omnicare; and “that [CVS] was aware of the compliance issues that underlie this case, and the fact that certain fixes had been proposed to remedy them” but “opted not to force [Omnicare] to adopt those fixes.”

The parties will submit briefing over the next month addressing the penalties to be assessed under the FCA, and CVS has said that it plans to appeal the decision. We at Qui Notes will continue to keep you updated on developments in the case.

© Arnold & Porter Kaye Scholer LLP 2025 All Rights Reserved. This Blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.