California officials have secured an $18.275 million settlement against The Pill Club, a Silicon Valley startup operating an online pharmacy for birth control and contraceptives.
Whistleblowers in the case — nurse practitioners Cindy Swintelski MSN, RN, FNP, and Happy Baumann, FNP-C — and their attorneys will share $4.59 million from the settlement, which does not include an admission of liability by The Pill Club, according to The Sacramento Bee.
The settlement resolved allegations that the company fraudulently billed Medi-Cal millions of dollars in an alleged scheme that exploited the Affordable Care Act's essential coverage mandate, which ensures that insurers cover contraception, according to the Justice Department.
The Pill Club allegedly defrauded Medi-Cal by submitting about 3,000 claims for 30-minute face-to-face counseling sessions when its nurse practitioners had no direct or real-time contact with those patients.
The company was also accused of dispensing large amounts of products its customers never asked for. The Pill Club dispensed shipments of FC2 female condoms to Medi-Cal beneficiaries who had no interest in the devices and billed Medi-Cal at prices that were about 250 percent higher than the retail price, according to the Justice Department.
Prosecutors said the company allegedly sent FC2 to customers — sometimes as many as 96 at a time — as part of a bundle when patients requested emergency contraception and it was reimbursed up to $2,253.80 for a single prescription delivery. The Pill Club allegedly continued sending patients the condoms and submitting Medi-Cal claims for them, even after the patients asked to stop receiving them.
"When I joined The Pill Club just over two years ago, I was drawn to the challenge of strengthening our operations to live up to our mission," The Pll Club CEO Liz Meyerdick said in a Feb. 7 statement. "I'm glad to have the opportunity to resolve these issues and to bring our full focus back to expanding access to contraceptive care for all who need it."