United States of America ex rel. Uri Bassan v. Omnicare, Inc.

Background

This False Claims Act case was originally brought by Uri Bassan on behalf of the federal government, 29 states, and the District of Columbia. In 2019, the United States intervened and filed its own complaint against Omnicare, Inc. and CVS Health Corp. CVS Pharmacy, Inc., a wholly owned subsidiary of CVS Health Corp., acquired Omnicare in August 2015.

The Government alleged that from 2010 through 2018 Omnicare dispensed prescription drugs to residents of long-term residential facilities without valid prescriptions required by state law. Omnicare allegedly submitted reimbursement claims to federal health-care programs containing false information. The Government alleged that Omnicare collected $460,034,505 in illegal reimbursements and that CVS Health Corp. caused Omnicare to submit the false claims by failing to correct known problems after the acquisition.

The Motion

After the Government rested its case at trial, CVS Health Corp. moved for judgment as a matter of law under Federal Rule of Civil Procedure 50(a), commonly called a directed verdict. It argued that the evidence showed it had no involvement in Omnicare’s drug-dispensing activities and that the Government had sued the wrong CVS entity.

The Government opposed the motion. It argued that CVS Health Corp. had assumed responsibility for overseeing Omnicare’s compliance through a 2016 Corporate Integrity Agreement with the Department of Health and Human Services’ Office of Inspector General. According to the Government, CVS-related compliance personnel identified cycle-fill or rollover dispensing and the use of chart orders as risks, proposed corrective steps, and reported the issues upward. The Government contended that CVS Health Corp. nevertheless failed to force Omnicare to implement those fixes while certifying compliance to the Government.

Court’s Analysis

The court explained that it could grant judgment as a matter of law only if, viewing the evidence in the Government’s favor, a reasonable jury would lack a legally sufficient basis to find for the Government. The court distinguished between mere awareness of a subsidiary’s false claims and direct participation in causing those claims to be submitted.

The court stated that ordinary parent-subsidiary ties—including ownership, financial benefit, overlapping personnel, and general oversight—are not enough by themselves to establish False Claims Act causation. It also concluded that CVS Health Corp.’s lack of employees or operational business was not automatically dispositive. A holding company can act through officers, directors, agents, or affiliated employees acting on its behalf.

The court found evidence from which a reasonable jury could conclude that CVS Health Corp. had ultimate oversight of Omnicare’s compliance, knew about the dispensing problems and proposed fixes, and chose not to require Omnicare to adopt those fixes. The court also recognized that the evidence could support CVS Health Corp.’s position that the relevant compliance responsibilities belonged to CVS Pharmacy or Omnicare, not CVS Health Corp. The court noted that there was little evidence specifically connecting the ultimate parent, as opposed to the broader CVS enterprise, to the disputed decisions.

Disposition

The court reserved judgment on CVS Health Corp.’s motion for a directed verdict and allowed the question of its False Claims Act liability to go to the jury. After the close of all evidence, CVS Health Corp. renewed the motion, but the court stated that it was not persuaded to change its decision. The opinion did not enter a final judgment on CVS Health Corp.’s liability; it left that issue for the jury, with further guidance on the meaning of direct participation.