CVS and Omnicare Hit with Nearly $1 Billion in FCA Damages and Penalties

In a landmark decision released on July 7, Judge McMahon has ordered CVS Health Corporation and its subsidiary Omnicare to pay nearly $950 million in damages and penalties for illegally dispensing drugs to elderly and disabled residents of long-term care facilities without valid prescriptions.

The ruling follows an April 29, 2025 jury verdict in the Southern District of New York that found Omnicare liable for submitting over three million false claims to the government, with CVS—which acquired Omnicare in 2015—deemed responsible for causing 30.4% of those violations.

Judge McMahon ordered Omnicare to pay $407 million in treble damages plus an additional $542 million in penalties. CVS was held jointly and severally liable for $164.8 million of the total amount, representing 30.4% of Omnicare’s penalties.

The decision resolves a notable discrepancy in the jury’s verdict, which had found CVS partially responsible for the false claims but awarded no separate damages against the healthcare giant. The government argued that this outcome likely reflected the jury’s attempt to avoid imposing a double recovery for the same claims.

“It is a virtual certainty that the jurors concluded that [CVS’] participation in the submission of false claims did not cause any damage over and above whatever damages were caused by Omnicare’s actual submission of those claims,” Judge McMahon wrote in her decision.

The judge acknowledged that the jury instructions had been “incomplete” on this issue, creating some ambiguity in how to interpret the verdict. However, she ultimately sided with the government’s position that penalties under the False Claims Act (FCA) are mandatory and calculated on a per-claim basis, distinct from damages that reflect actual financial loss to the government.

This case highlights the significant legal exposure companies face when acquiring businesses with potential compliance issues. CVS completed its acquisition of Omnicare in 2015, taking on not only the company’s assets but also its liabilities and legal vulnerabilities.

The healthcare sector has seen increasing regulatory scrutiny in recent years, with government agencies aggressively pursuing cases of fraud and improper billing practices. The pharmaceutical distribution and pharmacy services industries, in particular, have faced intense examination over prescription handling practices.

For long-term care facilities and their pharmacy service providers, the case underscores the critical importance of maintaining proper prescription documentation and verification processes. The violations centered on dispensing medications without legitimate prescriptions to vulnerable elderly and disabled patients, raising both legal and patient safety concerns.

Financial analysts note that while the $950 million judgment is substantial, it represents a relatively small portion of CVS Health’s annual revenue, which exceeded $357 billion in 2024. Nevertheless, the reputational impact and increased regulatory scrutiny could have longer-term consequences for the company.

Legal experts point out that the case is not yet fully resolved. Judge McMahon has yet to rule on the defendants’ motions for judgment as a matter of law, which could potentially overturn or modify the current decision.

The case also illustrates the complex legal dynamics in False Claims Act litigation, particularly regarding successor liability and the calculation of penalties versus damages. The court’s decision to apportion penalties proportionally based on the jury’s finding of responsibility creates an important precedent for future cases involving corporate acquisitions and liability.

Both CVS and Omnicare representatives declined to comment on whether they plan to appeal the decision once all outstanding motions are resolved.