CLEVELAND — Bankrupt pharmacy chain Rite Aid agreed Wednesday to settle two major civil cases that had been brought against it by the U.S. Attorney's Office for the Northern District of Ohio.
In the first case, the company agreed to pay the federal government $7.5 million and grant it a $401.8 million unsecured claim in the company’s pending bankruptcy to settle claims stemming from the pharmacy chain’s role in the nation’s opioid crisis.
“Pharmacies and pharmacists have an affirmative legal duty to ensure that the prescriptions they fill are legitimate,” U.S. Attorney Rebecca C. Lutzko said. “When they disregard this responsibility and instead ignore red flags indicating that prescriptions for addictive painkillers are invalid, they violate the public’s trust and harm the community they are supposed to serve — all to make a buck. Our settlement with Rite Aid reinforces the Northern District of Ohio’s continued commitment to combatting the opioid crisis.”
The lawsuit alleged that between 2014 and 2019, Rite Aid knowingly dispensed hundreds of thousands of unlawful prescriptions for highly addictive controlled substances such as oxycodone and fentanyl. According to the government, Rite Aid ignored clear “red flags” that its staff either ignored or did not recognize.
In the second case, Rite Aid and three of its subsidiaries agreed to pay the government $101 million and grant the government an unsubordinated, general unsecured claim for $20 million in the bankruptcy proceedings over claims that it failed to report drug rebates to Medicare.
“Rite Aid and its Elixir subsidiaries lined their corporate pockets with millions of dollars of manufacturer rebates that should have been reported to Medicare,” Ms. Lutzko said. “Each of those dollars could have been used to benefit Americans with genuine health care needs.”
Both settlements were approved on June 28 by the New Jersey bankruptcy court overseeing the drugstore chain’s reorganization. Final resolution of Rite Aid’s bankruptcy is expected to become effective later this summer. The amount the government will recover on its unsecured claim under the settlement will depend on the ultimate amount of assets available to the bankruptcy estate for distribution to unsecured creditors.
First Published July 10, 2024, 8:57 p.m.
