Walgreen pays $7.9 million to settle federal case

Deerfield-based Walgreen Co. agreed to pay $7.9 million to resolve allegations that stores provided $25 gift cards to consumers to switch their prescriptions when those people were on government-funded health programs and ineligible for such benefits, the U.S. Justice Department said Friday.

The settlement resolves allegations that Walgreens offered illegal inducements to beneficiaries of government health care programs, including Medicare, Medicaid, TRICARE and the Federal Employees Health Benefits Program, with gift cards, gift checks and other similar promotions that are prohibited by law, to transfer their prescriptions to Walgreens pharmacies, the Justice Department said in a statement.

Walgreen did not admit liability, the justice department said.

“We have denied the government’s allegations, and we are pleased to resolve this matter and avoid the uncertainty of future litigation,” Walgreen spokesman Michael Polzin said. He declined further comment.

The government investigation alleged that Walgreens had offered government health beneficiaries $25 gift cards when they transferred a prescription from another pharmacy to Walgreens. Advertisements that promoted gift cards and gift checks for transferred prescriptions typically acknowledged that the offer was not valid with Medicaid, Medicare or any other government program. Nevertheless, the government alleged that Walgreens employees frequently ignored the stated exemptions on the face of the coupons and handed gift cards to customers who were beneficiaries of government health programs, in violation of federal law, the justice department stated.

The allegations were brought to the government by two whistle-blowers in two separate lawsuits. The whistle-blowers, Cassie Bass, a pharmacy technician formerly employed by Walgreens, and Jack Chin, an independent pharmacist, will receive $1,277,172 from the government for their roles in the case. The federal share of the settlement is $7,298,124.

Polzin declined to say when Bass worked for Walgreens and at what store.

U.S. attorneys in California and Michigan were involved in the case.

“This case represents the government’s strong commitment to pursuing improper practices in the retail pharmacy industry that have the effect of manipulating patient decisions,” Stuart F. Delery, acting assistant attorney general for the Department of Justice’s civil division, said in a statement.