The Long Litigation Nears an End: Omnicare, CVS, and DOJ Reach a $440 Million Deal

Over the past year, Qui Notes has been following the FCA litigation against Omnicare and its parent company, CVS Health Corporation (CVS), from a $135.6 million single damages verdict against the company in the Southern District of New York in April 2025 to a judgment approaching $1 billion by the same court in July 2025. The parties now appear to have found a path toward resolution, with a bankruptcy judge on August 12, 2026 approving the disclosure and voting process for Omnicare’s proposed Chapter 11 plan and related settlements.

As a refresher, the case stems from a qui tam complaint filed by an Omnicare pharmacist in 2015 alleging that Omnicare dispensed drugs to residents of long-term care facilities without valid prescriptions and then sought reimbursement from federal healthcare programs. After nearly a decade of litigation, including intervention by the federal government, 29 states, and the District of Columbia, a jury found Omnicare liable and concluded that CVS — which had acquired Omnicare in 2015 — caused false claims to be submitted. CVS continued to challenge both the liability finding against it and the government’s request for more than $700 million in penalties.

In July 2025, the district court imposed approximately $948.8 million in liability on Omnicare, which included trebled damages and $542 million in statutory penalties, and held CVS jointly and severally liable for $164.8 million of the penalties. Both defendants appealed, and Omnicare subsequently filed for Chapter 11 bankruptcy protection in the Northern District of Texas.

Following Omnicare’s Chapter 11 filing, the parties took their dispute to the bankruptcy court, where Omnicare, CVS, and the U.S. Department of Justice (DOJ) have now reached a proposed settlement that would resolve DOJ’s FCA claims and related disputes. Per the settlement, DOJ will receive at least $440 million of the judgment. CVS is to pay $130 million shortly after the agreement becomes effective, and DOJ will receive at least another $310 million from Omnicare’s bankruptcy estates. The settlement does not include any admission of liability or wrongdoing by CVS or Omnicare. DOJ will release the FCA-related claims and resulting judgment after CVS makes the initial payment, provides the required security, and Omnicare and CVS dismiss their appeals with prejudice.

On August 12, 2026, the bankruptcy court approved the disclosure and voting process for Omnicare’s proposed Chapter 11 plan and related settlements. The plan itself remains subject to creditor voting and bankruptcy confirmation, with the confirmation hearing set for September 17, 2026.

The scale of the liability finding and the proposed settlement posture in this case highlight DOJ’s continued focus on billing practices within the healthcare sector — in particular, in matters connected to long-term care facilities and patients. The recovery is also a reminder that acquiring companies are not per se shielded from liability stemming from alleged pre-acquisition conduct by the target: post-acquisition oversight, integration, and compliance remediation are key. Finally, although a bankruptcy filing may shift incentives and reshape the structure of a recovery, it does not eliminate exposure. Here, DOJ remained a central creditor throughout the restructuring process and ultimately secured a substantial, albeit reduced, recovery as a creditor.

Stay tuned for additional updates on this and other matters through our Qui Notes blog.

© Arnold & Porter Kaye Scholer LLP 2026 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.