Food City, operating as K-VA-T Food Stores Inc., a well-known regional grocery chain with its headquarters in Abingdon, Virginia, has reached a settlement with the government concerning allegations under the False Claims Act (FCA). The allegations are related to the pharmacy operations within Food City stores and their dispensing of opioids and other controlled substances. According to the official settlement details, Food City is set to pay the United States a substantial sum of $8,488,378. Furthermore, an additional $78,621 will be paid to the states of Virginia and Kentucky to resolve claims made to Food City by state Medicaid programs.
This significant settlement highlights the critical responsibility that pharmacies, including those within grocery chains like Food City Pharmacy locations, have in ensuring the legitimacy of prescriptions, particularly for powerful substances like opioids. Principal Deputy Assistant Attorney General Brian M. Boynton, who leads the Justice Department’s Civil Division, stated, “Pharmacies that fill prescriptions for opioids and other controlled substances have an obligation to ensure that those prescriptions are medically necessary.” He further emphasized the department’s commitment to holding pharmacies accountable for neglecting 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 fill prescriptions for opioids and other powerful controlled substances without regard to their legitimacy or medical necessity it significantly contributes to the opioid epidemic, causing great harm to our citizens and communities,” Hamilton said. He underscored that this settlement serves as a clear message that the U.S. Attorney’s Office, along with its federal, state, and local law enforcement partners, are actively employing all available resources to combat the opioid crisis.
The oversight of prescription drug services within federal healthcare programs is also a key focus. Special Agent in Charge Kelly J. Blackmon of the Department of Health and Human Services Office of Inspector General (HHS-OIG) emphasized the importance of this case for program integrity. “The Medicare and Medicaid programs deliver vital prescription drug services to beneficiaries,” Blackmon stated. “This case underscores HHS-OIG’s dedication to addressing the nation’s opioid overdose crisis and ensuring that only legitimate, medically necessary prescriptions are dispensed.”
The opioid epidemic’s devastating impact extends across the nation, affecting countless families. Special Agent in Charge Derek M. Holt of the Office of Personnel Management Office of the Inspector General highlighted the broader context of this issue. “The opioid epidemic continues to significantly impact the nation, devastating families across our country,” Holt said. He commended the collaborative efforts of law enforcement partners and the Justice Department in holding pharmacies accountable for actions that could worsen the epidemic and endanger patient health and safety within federal health care programs.
Reinforcing the commitment from various agencies, Special Agent in Charge Darrin K. Jones of the Department of Defense Office of Inspector General, Defense Criminal Investigative Service (DCIS), Southeast Field Office, stated, “This settlement demonstrates our commitment to holding pharmacies that knowingly dispense medically unnecessary opioids and other controlled substances accountable for their actions.” Jones also expressed gratitude to the U.S. Attorney’s Office and investigative partners for their dedication to fighting the opioid epidemic and protecting service members and their families.
The Defense Health Agency’s Pharmacy Operations Division also weighed in on the importance of safe and appropriate care for military personnel and their families. Chief Edward C. Norton Jr. stated, “TRICARE is committed to providing safe, effective, and appropriate care to our warfighters, retirees, veterans and their families.” He firmly asserted that dispensing medically unnecessary substances to beneficiaries is unacceptable and that accountability will be maintained to ensure the highest standards of healthcare for those who serve or have served the nation.
The allegations against Food City pharmacy specifically cover a period from January 1, 2011, through December 31, 2018. During this time, it is alleged that 24 Food City store pharmacies dispensed opioids and other controlled substances that were not medically necessary, lacked legitimate medical purpose, and were not based on valid prescriptions. The core of the government’s case is that Food City knowingly submitted, or caused to be submitted, false claims to federal healthcare programs as a result of these dispensing practices.
It is important to note that this civil settlement originated from claims brought under the qui tam provisions of the False Claims Act. These provisions allow individuals to act as whistleblowers, filing actions on behalf of the United States and receiving a portion of any recovered funds. In this case, K-VA-T Litigation Partnership, LLP initiated the qui tam case, captioned 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 bringing this information to light, Relator K-VA-T Litigation Partnership, LLP will receive $1,527,908 from the settlement proceeds.
The successful resolution of this complex matter was a collaborative effort involving multiple government bodies. The Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Eastern District of Tennessee worked in coordination with assistance from HHS-OIG and DCIS. This inter-agency cooperation underscores the government’s comprehensive approach to tackling health care fraud and the opioid crisis.
This case serves as a significant example of the government’s strong focus on combating health care fraud. The False Claims Act is highlighted as a crucial tool in these efforts. The public is encouraged to report any potential fraud, waste, abuse, and mismanagement to HHS at 800-HHS-TIPS (800-447-8477), emphasizing the role of public vigilance in maintaining the integrity of healthcare systems.
The legal teams responsible for this settlement include Trial Attorney Elizabeth J. Kappakas of the Civil Division’s Fraud Section and Assistant U.S. Attorneys Alan G. McGonigal and Alexa O. Hadley for the Eastern District of Tennessee.
Finally, it is crucial to remember that the claims resolved by the settlement are allegations only, and there has been no determination of liability. This settlement represents an agreement to resolve allegations, not an admission of wrongdoing by Food City pharmacy.
