Retailer to Pay Nearly $1.7M in Walmart Whistleblower Lawsuit

Walmart has recently agreed to a settlement of nearly $1.7 million to resolve claims in a whistleblower lawsuit that it neglected to verify pharmaceutical prescriptions prior to seeking reimbursement from Medi-Cal.

In California’s Eastern District, the U.S. Attorney for the case, Philip A. Talbert, said that the settlement represented enforcement of a regulation that is “essential” for preventing pharmacies from submitting claims to Medi-Cal, California’s state medical program, to receive reimbursement for drugs that have not been prescribed for a designated purpose.

The relator in the Walmart whistleblower lawsuit is pharmacist Glenn Dabek who was employed at four different Walmart stores throughout his tenure with the company. The lawsuit, filed in October 2014, accused Walmart of failing to perform its role as a gatekeeper by verifying certain prescription drugs were to be dispensed only if patients had a specific diagnosis. The state does not pay for prescriptions unless they are aimed at a specific ailment.

“These Medi-Cal regulations are essential to protect both patients and limited healthcare funding,” Talbert stated. “My office will continue to hold pharmacies accountable when they failed to comply with regulations like these.”

As part of the settlement in the Walmart whistleblower lawsuit, the retailer did not admit to any wrongdoing in its decision to settle the issue. “We disagree with the allegations, however, in the best interest of the company we elected to settle this issue,” spokesperson Randy Hargrove said in a statement. “We cooperated fully during the investigation and are pleased to have resolved the matter.”

The allegations in the Walmart whistleblower lawsuit focus on the “Code 1” drugs on Medi-Cal’s list. Each of these drugs on the list has certain restrictions designated, with Medi-Cal only reimbursing certain Code 1 drugs on the list if there is an accompanying approved diagnosis. Additionally, the safety, efficacy, potential for misuse and cost of the drug are also taken into account, Talbert stated.

Pharmacies are only able to bill Medi-Cal if they have performed in a gatekeeping capacity first, ensuring that the state medical program is only billed once the pharmacy has verified the intended drug’s usage. Special approval may also be granted by the state for drugs that have not been previously approved on the list on a case-by-case basis from the pharmacy’s request.

The whistleblower stated that during his employment with Walmart, several of the stores he worked at did not perform the required gatekeeping functions and simply billed Medi-Cal for the requested drugs without first consulting the Code 1 list to make sure that the drugs were prescribed for the designated purpose.

Dabek said the lack of gatekeeping was widespread and potentially happening company-wide because billing Medi-Cal without checking was a standard corporate policy, according to the Walmart whistleblower lawsuit.

In May of this year, California and the federal government chose to intervene in a limited manner and settle the lawsuit, according to court records. For his role as the whistleblower, Dabek will receive $264,000 as compensation.

The Walmart Whistleblower Lawsuit is Dabek et al. v. Walmart Stores Inc., Case No. 2:14-cv-02350, in the U.S. District Court for the Eastern District of California.

If you believe you have witnessed fraud committed against the government, you may be entitled to compensation. Contact the experienced whistleblower attorneys at Bradley/Grombacher for a FREE case evaluation.