This month, Bloomberg released an article, titled “Rite Aid Advisers Rake in Millions Through Bankruptcy. Opioid Victims Brace for Nothing,” that details how the nationwide pharmacy chain Rite Aid, while facing litigation for its role in the opioid crisis, filed for bankruptcy to put that litigation on hold. While creditors, bankruptcy advisors, and consultants are first on the list to be compensated in the aftermath of the bankruptcy, the individuals suffering from addiction caused by Rite Aid likely will receive next to nothing.

Part of the effort to hold Rite Aid accountable was a whistleblower lawsuit filed by Baron & Budd. As the article details, “A whistleblower lawsuit filed by three Rite Aid pharmacists in 2019 alleged the company illegally filled ‘hundreds of thousands’ of invalid prescriptions and billed the US government for ones that were covered by Medicare and Medicaid.” The article continues: “The US Justice Department intervened in the case in March 2023 to file its own complaint in support of the allegations, saying Rite Aid’s practices ‘opened the floodgates’ for millions of illegal opioid pills.”

The Baron and Budd whistleblower case against Rite Aid alleged violations of the False Claims Act and the Controlled Substances Act. The DOJ stepping in meant that the federal government would be taking primary responsibility in litigating against Rite Aid and signaled the high level of priority the federal government was giving to holding companies accountable who played a role in the opioid epidemic.

Yet, before the whistleblower lawsuit and other lawsuits could proceed further in litigation, Rite Aid filed for bankruptcy and the cases were put on hold. According to law professor Melissa Jacoby, who is quoted in the Bloomberg article, “Bankruptcy is perceived as a strategic tool that provides enormous leverage in negotiations with injured people.”

Bankruptcy is also very expensive, with large companies’ advisory fees climbing into the hundreds of millions. In Rite Aid’s case, only months into the court proceedings, Rite Aid is already facing at least $200 million in fees from lawyers, consultants, and bankers. Everyday people who are suffering from opioid addiction because of Rite Aid’s heinous practices are “at the back of the line.”

So, while companies like Walmart Inc., CVS Health Corp. and Walgreens Boots Alliance Inc. have agreed to pay more than $13 billion to settle opioid lawsuits, Rite Aid’s bankruptcy has stymied similar efforts against Rite Aid. While other drugmakers who have gone bankrupt still have been on the hook to pay opioid victims, Rite Aid has asserted that it won’t have any money to pay opioid victims. This could very well mean that opioid victims will receive little – if any – compensation from Rite Aid.

In the meantime, many opioid victims await word on if the company will compensate them at all. The bankruptcy case is their last chance to make the case that Rite Aid should compensate them. Those arguments will be made in front of a federal judge who will sign off on the company’s restructuring plan.

About Us

Baron & Budd’s whistleblower representation team has more than 40 years of experience representing dozens of clients in government fraud cases. They have returned over $6.0 billion to federal and state agencies with whistleblower recovery shares as high as 50%.