Virginia State Seal as part of the letterhead for the Attorney General.

Commonwealth of Virginia
Office of the Attorney General

Mark Herring
Attorney General

900 East Main Street
Richmond, Virginia 23219



For media inquiries only, contact:  
Brian J. Gottstein
Phone: (804)786-5874 
Email: This email address is being protected from spambots. You need JavaScript enabled to view it. (best contact method)

Cuccinelli announces $37 million Virginia Medicaid fraud settlement with McKesson Corp. for inflating prices of 400+ drugs

RICHMOND (October 18, 2013) - Attorney General Ken Cuccinelli announced today that Virginia will receive $37 million as part of a settlement his office negotiated with McKesson Corporation, one of the largest pharmaceutical wholesalers in the country, over allegations the company violated the Virginia Fraud Against Taxpayers Act by conspiring to inflate prices for more than 400 brand-named prescription drugs.

The attorney general alleged that McKesson conspired to inflate published Average Wholesale Price (AWP) information, causing Virginia's Medicaid program to overpay for those drugs. The Virginia Department of Medical Assistance Services (DMAS) uses the published AWP data to set Medicaid reimbursement rates for pharmaceuticals.

Virginia's $37 million settlement represents the largest recovery by any state Medicaid Fraud Control Unit (MFCU) against McKesson in this AWP case. In a previous settlement, which Virginia refused to join, 29 states, including California and New York, shared a total recovery of $151 million.

"This $37 million recovery shows that we will not tolerate Medicaid fraud in Virginia," said Cuccinelli. "It robs the taxpayers and it robs money needed for medical services for the poor. Our office refused to participate in a national settlement led by the Department of Justice because we needed to send a message that Virginia will fight to protect its Medicaid program from fraud and because the original settlement didn't cover the total loss to our Medicaid program.

"Our Medicaid Fraud Control Unit, working with the Virginia Department of Medical Assistance Services, was willing to go to trial in McKesson's hometown of San Francisco to get the maximum possible recovery we could in this case. Due to these efforts, we estimate that this $37 million recovery represents approximately ten times what other states that had a comparable impact to their Medicaid programs received from the previous, multistate settlement."

The settlement will return in excess of $30 million to the commonwealth's General Fund Health Care account within the next two weeks. $16.8 million is for compensatory damages for the state's Medicaid program, while $13.5 million is for penalties. This agreement resolves the case as to the Virginia state portion of Medicaid and imposes significant penalties upon McKesson Corporation for the alleged conduct.

"Combating Medicaid fraud has been a focus of my administration for the past three and a half years," Cuccinelli said. "When I took office, I made expanding our Medicaid fraud unit a priority precisely to achieve this type of result."

With this recovery, the office has returned more money to the General Fund during Cuccinelli 's tenure than has been allocated by the General Assembly to fund the office. From 2010-2013, the General Fund budget for the office was approximately $78 million. The Medicaid fraud unit alone has returned $67.7 million to the General Fund during that same time. Additionally, the Consumer Protection Section, which handles fraud not related to Medicaid, has returned $73 million to the General Fund. And through annual budget savings, Cuccinelli has returned $3.2 million from his budget to the General Fund over the last four years.

Virginia MFCU's recoveries in last three and a half years now total $1.6 billion - more than all other recoveries combined since MFCU began 30 years ago. This amount includes money recovered not only for Virginia, but for the federal Medicaid program and other states.

The  case was brought by Virginia's MFCU in the U.S. District Court for the Northern District of California, McKesson Corporation's home district. Assistant attorneys general William Clay Garrett, Patrick A. McDade, Adele M. Neiburg, Joseph S. Hall, Lisa H. Shin, Jessica M. Smith, Kimberly M. Bolton, and Pierce C. Acuff represented the commonwealth. The attorney general would also like to recognize many of his MFCU investigators and paralegals who worked on various aspects of the case.  The entire team reviewed more than three million pages of documents in the discovery phase of the litigation. 

The commonwealth also retained the services of Hagens Berman Sobol Shapiro LLP to assist as local counsel in the matter. The Virginia Department of Medical Assistance Services assisted in the development of the case, especially helping with evidence discovery. 

 
 

Medicaid Fraud Control Unit (MFCU) - News Release Archive

2013 Press Releases

December

December 18 - Local sheriffs, police chiefs get $33 million from AG for new crime-fighting equipment and training

December 5 - Cuccinelli uses $245,000 taken from criminals to buy bulletproof vests for Virginia law enforcement

November

November 4 - Cuccinelli recovers $21 million in health care fraud settlements with Johnson & Johnson

October

October 25 - Cuccinelli gives $30 million taken from criminals to help shore up state law enforcement retirement accounts

October 25 - Commonwealth's attorneys present Cuccinelli with "Champion of Justice" award

October 18 - Cuccinelli announces $37 million Virginia Medicaid fraud settlement with McKesson Corp. for inflating prices of 400+ drugs

October 16 - **Consumer Alert** - Cuccinelli warns of scams linked to Affordable Care Act’s health insurance marketplace rollout

October 9 - Local sheriffs and police chiefs get $4.2 million from AG for training for crisis situations involving those with mental illnesses

October 3 - Hampton mental health provider defrauded Medicaid for unnecessary services to children; state reclaims $1.5 million in fraudulent payments

September

September 30 - In contrast to Washington, Cuccinelli's office returns part of budget to General Assembly at end of each fiscal year

August

August 28 - MEMO to Media: Roanoke Times story gets it wrong on AG's Medicaid fraud recoveries

July

July 26 - Attorney General Cuccinelli seeking approval to use fraud settlement to shore up law enforcement retirement funds

June

June 28 - Attorney general proposes to fund law enforcement training for responding to crisis situations involving the mentally ill

June 5 - Feds agree to release $115 million due Virginia from Medicaid fraud settlement

June 5 - Feds Refuse to release $115 million due Virginia from Medicaid fraud settlement

March

March 22 - Owners of Woodbridge home health care business sentenced to 121 months for $2.1 million in health care fraud

March 21 - Former Saltville Rescue Squad president sentenced for fraudulently billing Medicare more than $1.6 million

February

February 27 - Attorney General Cuccinelli announces settlement with Texas-based pharmaceutical manufacturer for illegal marketing of Xenaderm

February 22 - Former Roanoke doctor convicted of drug distribution charges

February 20 - Suffolk home health care services provider pleads guilty to $294,000 in Medicaid fraud

January

January 30 - Danville woman pleads guilty to stealing social security benefits

January 11 - Owners of Woodbridge home health business convicted for health care fraud, aggravated identity theft

January 10 - 2013 Legislative Agenda of Attorney General Cuccinelli