McKesson Medicaid Fraud Case to Proceed to Trial

A federal judge in San Francisco has denied motions for partial summary judgment made by both McKesson Corporation and the Commonwealth of Virginia.  The case, involving violations of  the Virginia Fraud Against the Taxpayers Act  (VFATA), Virginia’s state equivalent of the federal False Claims Act, will proceed to trial.  Virginia alleges that McKesson violated the VFATA when it conspired with First DataBank, Inc. (FDB) to extract overpayments from Virginia’s Medicaid program for McKesson pharmaceuticals.

Currently, pharmacies buy drugs from wholesalers (such as McKesson) at a wholesale acquisition cost (WAC) and are reimbursed for the distribution of the drugs by Virginia’s Medicaid agency at the average wholesale price (AWP).  The difference between the WAC and the AWP represents the pharmacies’ profits.  McKesson allegedly constructed a scheme with FDB to mark up the AWPs, resulting in overpayment from Virginia’s Medicaid to the pharmacy customers.

The VFATA mirrors the language of the federal False Claims Act, which is intended to prevent and punish false or fraudulent claims against the government.  Under the False Claims Act, a private citizen with knowledge of fraud against the government may sue on behalf of the government and share in the recovery.

Last April, McKesson agreed to pay the U.S. government more than $190 million to resolve claims that it violated the federal False Claims Act by reporting inflated pricing information for a large number of prescription drugs, causing Medicaid to overpay for those drugs

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.