The Saga Continues: CVS and Omnicare Face FCA Damages and Penalties Totaling Nearly $1 Billion

Over the past couple of months, we at Qui Notes have been covering the post-verdict legal wrangling between CVS Health Corporation (CVS) and the government following a trial in the Southern District of New York, where the jury found CVS and its subsidiary Omnicare liable for illegally dispensing drugs to elderly and disabled people in long-term care facilities without legitimate prescriptions. Now, Judge McMahon has issued a decision regarding damages and penalties in the case.

To recap, on April 29, 2025, the jury found Omnicare liable for nearly $136 million in damages for submitting over three million false claims and determined that CVS — which acquired Omnicare in 2015 — caused 30.4% of those claims to be submitted, but found no additional damages for CVS. On June 6, the government filed a brief explaining the basis for the damages and penalties it is seeking in the case, including $164.8 million in penalties against CVS. Although the government acknowledged that the jury found CVS’ conduct did not cause the government to suffer any damages beyond the damages assessed against Omnicare, it argued that penalties could still be imposed and, in fact, are mandatory. The government argued that the jury’s verdict was likely a reflection of the fact that the jury believed that CVS “did not cause separate damages, over and above the damages caused by Omnicare” and was trying to avoid a double recovery from Omnicare and CVS for the same claims.

In her July 7 decision, Judge McMahon sided with the government, trebling Omnicare’s damages (for a total of nearly $407 million), imposing $542 million in penalties on Omnicare, and holding CVS jointly and severally liable for $164.8 million of that amount. With respect to the fact that the jury did not award any damages as to CVS, Judge McMahon found that “it is a virtual certainty that the jurors concluded that [CVS’] participation in the submission of false claims did not cause any damage over and above whatever damages were caused by Omnicare’s actual submission of those claims.” (Of note, Judge McMahon acknowledged that the jury instructions had been “incomplete” on this issue.) Judge McMahon also noted that there are cases where a court has awarded FCA penalties, even in the absence of damages, and that FCA penalties are calculated on a per-claim basis, as opposed to damages, which reflect actual loss to the government.

Therefore, because the jury found CVS participated in 30.4% of the false claims submitted by Omnicare, Judge McMahon found that an “equitable solution” would be to hold CVS “jointly and severally liable for 30.4% of the penalties imposed upon Omnicare — or $164.8 million.”

Judge McMahon has yet to rule on the defendants’ motions for judgment as a matter of law, so stay tuned for more updates 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.