They Won’t Back Down: CVS Continues the Fight; Government Seeks Penalties

Last month, Qui Notes reported on the verdict in the FCA trial of Omnicare and CVS Health Corporation (CVS) in the Southern District of New York, in which a jury found that CVS caused Omnicare to file false claims but that CVS’ conduct did not cause the government to suffer any damages.

On June 5, 2025, Judge McMahon denied CVS’ motion for a directed verdict after having reserved judgment in her April 25 opinion. As she had in her prior opinion, Judge McMahon focused on the fact that CVS entered into a Corporate Integrity Agreement (CIA) involving prior conduct by Omnicare, which included requirements regarding prescription drug dispensing systems and procedures. Judge McMahon also found that there was sufficient evidence to show that the Chief Compliance Officer of CVS was aware of Omnicare’s issues with prescription refills — and that the issues were not adequately addressed — but nevertheless certified to the Office of Inspector General that CVS had implemented procedures to ensure the accurate dispensing of drugs.

Undeterred, the following day, CVS filed a motion seeking judgment as a matter of law. CVS’ motion, in part, responds to the denial of the motion for a directed verdict, arguing that CVS is a holding company with no employees, conducts no pharmacy operations, and has no role in Omnicare’s claim submissions. At most, CVS argued, any evidence of awareness plus inaction was insufficient to find that CVS caused Omnicare’s submission of false claims. With respect to the CIA, CVS argued that the provision on which Judge McMahon focused was not related to the government’s allegations regarding Omnicare’s dispensing practices. In response, the government filed a letter to Judge McMahon, asking that she summarily deny CVS’ motion without further briefing, arguing that the issue of CVS’ involvement in the submission of false claims had been fully briefed and decided in connection with the motion for a directed verdict. Judge McMahon declined to do so and directed the government to file its response brief.

Also on June 6, the government filed a brief explaining the basis for the penalties it is seeking in the case, which include $164.8 million in penalties against CVS and $542 million in penalties against Omnicare. Although the government acknowledged that the jury found CVS’ conduct did not cause the government to suffer any damages, it argued that “[p]enalties are mandatory as to each false claim for which a defendant is liable, even if no damages are awarded against the defendant.” Specifically, the government argued that “the FCA does not condition penalties upon a finding of damages, and as this Court properly instructed the jury, damages are not an element of a[n] FCA violation.”

Attempting to reconcile the jury’s finding with the penalties it is seeking from CVS, the government argued that the jury’s verdict “must be interpreted as an assessment that [CVS] did not cause separate damages, over and above the damages caused by Omnicare. In other words, the jury was likely seeking to avoid a double recovery from [CVS] for the same claims as to which it had already awarded damages as to Omnicare, without understanding that the parties would be held jointly-and-severally liable for damages” (emphasis in original).

Not surprisingly, CVS strenuously objected to the government’s proposed penalties. In its reply brief, CVS argued that there is no evidence that it engaged in the type of conduct that would justify punitive sanctions, as proven by the fact that the jury found no damages as to CVS. CVS also argued that the government did not cite any cases imposing penalties where a jury was asked to find damages but expressly found the party caused none. Therefore, it argued, “[i]mposing an additional $164.8 million in penalties — over 120% of the actual damages the jury attributed to Omnicare — tied to the same claims would squarely contradict that jury finding” (emphasis in original).

Although CVS has publicly stated that it plans to appeal the jury’s verdict, it has not yet done so. We at Qui Notes will continue to monitor the developments in this 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.