Walgreen to pay $22.4 million in N.Y. Medicaid improper billing case

NEW YORK (Reuters) - Walgreen Co has reached a $22.4 million settlement with the New York attorney general resolving claims that a unit improperly billed the government for reimbursement for a pediatric drug.

The sign of a Walgreens store is pictured in Pasadena, California December 20, 2013. REUTERS/Mario Anzuoni

The settlement, disclosed in court papers filed in Manhattan federal court on Thursday, resolves claims first asserted in 2009 by a whistleblower in a lawsuit against Trinity Homecare LLC, a pharmacy primarily owned by Walgreen.

The settlement marked the second in less than two weeks by the New York attorney general and Walgreen over improper conduct and billings by Trinity, after an earlier $2.55 million accord on June 29.

Walgreen agreed to the settlement to avoid delay and expense and did so without any admission of liability, said spokesman James Cohn.

The latest settlement concerned an injectable respiratory drug called Synagis, a brand name drug sold by AstraZeneca Plc that is intended for at-risk premature infants.

According to the whistleblower lawsuit filed by a hospital physician, Susan Vierczhalek, Trinity promoted the off-label use of the drug and caused false claims to be submitted to the government.

In a statement, New York Attorney General Eric Schneiderman said the pharmacy “did not always have a prescription for that drug, but billed Medicaid for it anyway.”

“Of greater concern than the improper billing, is the possibility that infants could have received injections which were not properly prescribed to them,” he said.

The federal government will receive some of the settlement, while New York will receive $12.23 million, Schneiderman’s office said. New York in turn will pay Vierczhalek $4 million as her share of the settlement, according to court papers.

Barbara Hart, Vierczhalek’s lawyer, called the settlement “a great fraud recovery for Medicaid and gratifying in all respects.”

Representatives for Walgreen did not respond to requests for comment.

Walgreen is part of Walgreens Boots Alliance Inc, and this year sold a majority stake in Trinity’s parent Walgreens Infusion Services to private equity firm Madison Dearborn Partners. That business is now known as Option Care.

Reporting by Nate Raymond in New York; Editing by Lisa Shumaker