Walmart files pre-emptive lawsuit against federal government in opioid case

Walmart Inc. sued the federal government in an attempt to strike a pre-emptive blow against what it said is an impending opioid-related civil action from the Justice Department.

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WMT	WALMART INC.	92.50	+0.62	+0.67%

The retail giant said in its lawsuit that the Justice Department and Drug Enforcement Administration are seeking to scapegoat the company for the federal government’s own regulatory and enforcement shortcomings in the opioid crisis.

Walmart said the government is seeking steep financial penalties against the retailer for allegedly contributing to the opioid crisis by filling questionable prescriptions.

The suit names the department and Attorney General William Barr as defendants, as well as the DEA and its acting administrator, Timothy Shea. It is asking for a declaration from a federal judge that the government has no lawful basis for seeking civil damages from the company based on claims pharmacists filled valid prescriptions that they should have known raised red flags.

Walmart, which operates more than 5,000 in-store pharmacies in the U.S., said the government’s “threatened action would be unprecedented.” It said the government hasn’t alleged that the company was filling altered prescriptions, or that its pharmacists had inappropriate relationships with patients or doctors.

“In the shadow of their own profound failures, DOJ and DEA now seek to retroactively impose on pharmacists and pharmacies unworkable requirements that are not found in any law and go beyond what pharmacists are trained and licensed to perform,” the company said in the lawsuit, filed in federal court in the Eastern District of Texas.

The Justice Department and DEA declined to comment.

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Walmart’s lawsuit is an unusual and aggressive tactic for a company in high-stakes talks with the department. Its suit won’t necessarily head off any Justice Department action, but a court ruling embracing the company’s view of the law could give it a weapon against any government case.

Quicken Loans Inc. tried a similar tactic against the federal government in 2015 to avoid being pegged with mortgage fraud, but the Justice Department sued weeks later in a case Quicken settled last year.

Walmart said the department has identified hundreds of specific doctors as having written problematic prescriptions that company pharmacists allegedly shouldn’t have filled, according to the government. But nearly 70% of those doctors continue to have active DEA registrations, the company said.

“In other words, defendants want to blame Walmart for continuing to fill purportedly bad prescriptions written by doctors that DEA and state regulators enabled to write those prescriptions in the first place and continue to stand by today,” Walmart said in the suit.

Walmart is one of several large companies that have been targeted in lawsuits by state and local governments for allegedly helping to fuel the opioid crisis. About 3,000 of the cases have been consolidated in a federal court in Ohio, where a judge has pressed both sides to settle for nearly three years.

Plaintiffs focused less on Walmart in the early days of the opioid litigation, though the company has since been sued by counties and a handful of states across the country for its role as both a distributor of opioids to its own stores and as a pharmacy.

Walmart pharmacists felt pressure to fill prescriptions quickly, the plaintiffs alleged, and had incentive bonuses tied to volume. Walmart stopped serving as its own distributor of controlled substances in 2018.

Walmart has denied the allegations and said that opioid dispensing is a small part of its business.

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The Justice Department previously launched a criminal investigation, based out of the U.S. Attorney’s Office for the Eastern District of Texas, related to Walmart’s dispensing of opioids. The department’s leadership in Washington decided in 2018 against bringing charges, according to the company’s lawsuit. The department’s decision not to prosecute was reported previously by ProPublica.

Walmart in its complaint Thursday alleged federal prosecutors “tried to use the threat of criminal indictment to pressure the company into paying a massive civil penalty.” One U.S. attorney suggested the company could afford to pay $1 billion, the lawsuit said.

The company argues in the lawsuit that the federal government was placing it in an untenable position because pharmacists face professional and legal risks -- and potential harm to patients -- if they reject prescriptions, but face federal liability if they do fill them and the government determines they shouldn’t have.

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Initial civil settlement talks in the broader opioid litigation have focused on the three biggest drug distributors in the country, Cardinal Health Inc., AmerisourceBergen PLC and McKesson Corp. , as well as major drugmakers including Johnson & Johnson. States are nearing a $26.4 billion settlement with those four companies and are in settlement discussions with others up and down the pharmaceutical supply chain.

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CAH	CARDINAL HEALTH INC.	122.24	-0.39	-0.32%
ABC	NO DATA AVAILABLE	-	-	-
MCK	MCKESSON CORP.	628.50	+2.12	+0.34%
JNJ	JOHNSON & JOHNSON	155.01	-0.39	-0.25%

Some targets in the litigation, including OxyContin maker Purdue Pharma LP, have filed for bankruptcy to try to resolve the cases. Purdue agreed this week to plead guilty to three felonies related to its marketing and distribution of OxyContin, as part of an $8.34 billion settlement of civil and criminal investigations pursued by the Justice Department.

Walmart was among six pharmacies slated to go to trial in federal court in November in the cases of Ohio’s Cuyahoga and Summit counties. The judge, however, recently delayed the trial indefinitely, citing the coronavirus pandemic. That trial was set to focus on the pharmacies’ roles as distributors of opioids to their own stores but wouldn’t have included allegations related to dispensing drugs to customers.

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