CVS Health subsidiary Omnicare has filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Northern District of Texas.
The filing comes after a recent ruling in a civil case in the U.S. District Court for the Southern District of New York and broader financial difficulties, according to an Sept. 22 news release from CVS Health. In July, a federal judge ordered the company to pay $948.8 million in damages and penalties in a case claiming the company submitted fraudulent claims to Medicare and Medicaid.
In April, the jury found Omnicare’s practices resulted in $135.6 million in federal losses, with the final judgment tripling the damages under the False Claims Act treble damages provision.
As part of the bankruptcy process, Omnicare secured $110 million in debtor-in-possession financing to maintain operations. The company is seeking court approval for motions that would allow it to continue paying employees wages and benefits and to pay vendors and suppliers going forward.
Omnicare said it intends to explore restructuring options, including a possible sale, the release said. The company provides pharmacy services to long-term care facilities.
