The way pharmacies in grocery stores run is almost unremarkable. Without giving a second thought to the number that is submitted to Medicare on your behalf, you give your insurance card, wait by the greeting card aisle, and pick up your prescription. For years, at the pharmacy counters of Stop & Shop, Giant, Hannaford, and Food Lion, that quiet, unremarkable transaction was at the heart of something much more unusual.
The Massachusetts-based parent company of some of the most well-known grocery chains on the East Coast, Ahold Delhaize USA, has agreed to pay $40 million to resolve federal claims that its in-store pharmacies reported inflated prescription prices to Medicare Part D, Medicaid, and TRICARE. The government’s stance is simple: if a pharmacy gives savings program participants a discounted price, that discounted price should be reported as the “usual and customary” rate. That is allegedly not the case here.
Most people are unaware of how far back the timeline goes. The practice is alleged to have occurred in legacy Delhaize stores between 2009 and 2016. Ahold legacy stores, 2013–2017. The government claims it was covertly paying more than it should have for common prescription medications during nearly ten years of routine billing across thousands of transactions.
It is worthwhile to consider the true implications of that. These weren’t complex financial schemes or transactions on the black market. These were savings programs, the kind that pharmacies promote in front of the counter to give customers the impression that they are getting a good deal. The lower price was paid by members. Apparently, the higher bill was sent to the government.
This was discovered by Lawrence LaBenne, a former pharmacist at an Ahold Delhaize location in Pennsylvania. In July 2018, he filed a whistleblower lawsuit under the False Claims Act, a federal law that was first passed during the Civil War to prevent contractor fraud and is currently one of the government’s most effective tools for combating billing abuse. Private parties may file a lawsuit on behalf of the government under the act’s qui tam clause and receive a share of the proceeds. The settlement will give LaBenne more than $6 million. An extra $765,000 is given to his legal team.
The federal government receives about $32.9 million of the $40 million total, with the remaining funds going to the participating states. It should not be confused with an exoneration because the agreement does not constitute Ahold Delhaize’s admission of liability, as is customary in these settlements. The Department of Justice clarified its stance. “Federal healthcare programs pay more than they should if pharmacies report inflated ‘usual and customary’ prices on claims,” stated Brett Shumate, assistant attorney general of the DOJ’s Civil Division.
Ahold Delhaize is expressly forbidden from going back and billing healthcare beneficiaries—patients, their families, and sponsors—to recoup the difference, which is one noteworthy aspect of the settlement terms. There won’t be an unexpected bill for customers who utilized these savings programs. This protection, which is subtly included in the contract, is more important than it first appears.
Cases like the Stop & Shop overcharge settlement seem to land with less force than they deserve, in part because the mechanics are complicated and in part because no single victim is able to present a check that reflects their losses. Prescription by prescription, the funds left federal programs in tiny amounts over the course of several years and states. The fraud feels abstract because of this diffusion. It shouldn’t. Taxpayers pay for Medicare and Medicaid, while military families are served by TRICARE. Even though it occurred in the background of everyday life, the overcharging was real.
Although the settlement officially ends the legal dispute, it raises legitimate concerns about how widespread this type of pricing disparity may be in the larger pharmacy sector. Ahold Delhaize is a big business. It is among the East Coast’s biggest supermarket chains. It is difficult not to wonder what else is covertly being billed at the incorrect number somewhere, at some pharmacy counter, right now, if this practice continued for almost ten years of operations under two different legacy companies before anyone raised an official flag.
