Food City, a well-known regional supermarket chain with its headquarters in Abingdon, Virginia, has reached a settlement with the U.S. government regarding accusations under the False Claims Act (FCA). The allegations are linked to the chain’s pharmacies dispensing opioids and other controlled substances. According to the official settlement details, Food City will be required to pay the United States a sum of $8,488,378. Additionally, Food City is set to pay $78,621 to the states of Virginia and Kentucky to resolve claims made by state Medicaid programs.
Brian M. Boynton, Principal Deputy Assistant Attorney General and head of the Justice Department’s Civil Division, stated, “Pharmacies that are responsible for filling prescriptions for opioids and other controlled substances have a critical obligation to ensure that these prescriptions are indeed medically necessary.” Boynton emphasized the Justice Department’s commitment to accountability, adding, “The department is dedicated to holding accountable those pharmacies that have neglected this duty, thereby contributing to the ongoing national opioid crisis.”
U.S. Attorney Francis M. Hamilton III for the Eastern District of Tennessee echoed these concerns, noting the severe impact of irresponsible dispensing practices. “When pharmacies dispense prescriptions for opioids and other potent controlled substances without properly verifying their legitimacy or medical necessity, it significantly fuels the opioid epidemic, inflicting immense harm on our citizens and communities,” said Hamilton. He further asserted that this settlement highlights the determination of the United States Attorney’s Office, along with federal, state, and local law enforcement partners, to utilize all available resources to combat the opioid crisis.
Kelly J. Blackmon, Special Agent in Charge at the Department of Health and Human Services Office of Inspector General (HHS-OIG), emphasized the importance of legitimate prescription services within federal healthcare programs. “The Medicare and Medicaid programs are essential in providing vital prescription drug services to beneficiaries,” Blackmon stated. “This case serves as a clear reminder of HHS-OIG’s unwavering commitment to tackling the nation’s opioid overdose crisis and to guarantee that only prescriptions that are medically necessary and legitimate are dispensed.”
Derek M. Holt, Special Agent in Charge of the Office of Personnel Management Office of the Inspector General, highlighted the widespread devastation caused by the opioid epidemic. “The opioid epidemic continues to have a significant and devastating impact across the nation, tearing apart families in every corner of our country,” said Holt. He commended the collaborative efforts of law enforcement partners and the Justice Department in ensuring pharmacies are held responsible for actions that could worsen the epidemic and jeopardize the well-being of patients within federal health care programs.
Darrin K. Jones, Special Agent in Charge of the Department of Defense Office of Inspector General, Defense Criminal Investigative Service (DCIS), Southeast Field Office, reinforced the commitment to accountability. “This settlement clearly demonstrates our dedication to holding pharmacies accountable when they knowingly dispense medically unnecessary opioids and other controlled substances,” stated Jones. He also thanked the U.S. Attorney’s Office and investigative partners for their continuous efforts in combating the opioid crisis and protecting service members and their families.
Chief Edward C. Norton Jr. of the Defense Health Agency’s Pharmacy Operations Division stressed the importance of safe and appropriate healthcare for military personnel and their families under the TRICARE program. “TRICARE is steadfast in its commitment to providing safe, effective, and appropriate care to our warfighters, retirees, veterans, and their families,” said Norton. He firmly stated, “Dispensing medically unnecessary opioids and other controlled substances to our beneficiaries poses significant risks and will not be tolerated. We will continue to ensure pharmacies adhere to these crucial standards to deliver the highest quality health benefits to those who have served our nation.”
The allegations brought forth by the United States detailed that, spanning from January 1, 2011, through December 31, 2018, a total of 24 Food City pharmacy locations dispensed opioids and other controlled substances that were deemed medically unnecessary. These substances allegedly lacked legitimate medical purpose, did not meet medically accepted indications, and were often dispensed without valid prescriptions. The U.S. government contended that, consequently, Food City knowingly submitted or facilitated the submission of false claims to federal healthcare programs.
This civil settlement also resolves claims initiated under the qui tam or whistleblower provisions of the False Claims Act, originally brought forward by K-VA-T Litigation Partnership, LLP. These provisions allow a private individual to file a lawsuit on behalf of the United States government and to receive a portion of any recovered funds. The qui tam case is officially titled U.S. ex rel. K-VA-T Litigation Partnership, LLP v. K-VA-T Food Stores, Inc. d/b/a Food City, Case No. 3:20-cv-436 (EDTN). As a result of their role in the case, Relator K-VA-T Litigation Partnership, LLP is set to receive $1,527,908 from the settlement proceeds.
The successful resolution of this case was a collaborative achievement involving the Justice Department’s Civil Division, specifically the Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Eastern District of Tennessee. Valuable assistance was also provided by HHS-OIG and DCIS.
This case underscores the government’s strong focus on fighting health care fraud. The False Claims Act is recognized as a critical tool in these efforts. The public is encouraged to report any potential fraud, waste, abuse, and mismanagement within health care programs to HHS at 800-HHS-TIPS (800-447-8477).
Trial Attorney Elizabeth J. Kappakas from the Civil Division’s Fraud Section, along with Assistant U.S. Attorneys Alan G. McGonigal and Alexa O. Hadley from the Eastern District of Tennessee, were key figures in handling this case.
It is important to note that the claims addressed in this settlement are allegations only, and there has been no formal determination of liability.
