Hayat Pharmacy Reaches $2 Million Settlement Over False Claims Act Allegations

Earlier this year, the United States Department of Justice (DOJ) announced a $2.05 million settlement with Milwaukee pharmacy chain Hayat Pharmacy over allegations that the pharmacy submitted false claims to Medicare and Medicaid for prescription medications.

The government alleged that Hayat Pharmacy submitted false claims to Medicare and Medicaid in 2019 for two different prescription medications: a topical cream made of iodoquinol, hydrocortisone, and aloe, and Azesco, a multivitamin. Allegedly, Hayat switched Medicare and Medicaid patients from lower cost medications to the more expensive cream and Azesco without a documented medical need and/or without a valid prescription. During the relevant time period, Medicaid paid thousands of dollars per prescription for the cream and Medicare paid hundreds of dollars per each Azesco prescription.

The money from the settlement will be divided between the state and federal governments. The state of Wisconsin, where Hayat is based, will receive a little more than 34% of the payments or roughly $700,000, including $342,000 in restitution. The federal government will receive nearly $1.35 million, with roughly $242,000 going to the former pharmacist who brought the initial complaint. Hayat will make roughly $1 million in payments this year with the remainder of the payments stretched over four installments through Dec. 1, 2024.

In addition to the $2,050,000 settlement, Hayat agreed to host annual training sessions for pharmacy staff covering a variety of topics, including waste, fraud and abuse, and compliance with rules over medication switches.

Hashim Zaibak, Hayat pharmacist and CEO, said that the accusations were leveled by a former employee and that the allegations are false, but the company opted to settle in an attempt to move forward. “From the very beginning, we knew that they were false and they could not be proven. At the end we had to settle, though,” said Zaibak. The complaint stated that the former pharmacist who blew the whistle was fired when executives discovered he was looking for a new job.

“Hayat vigorously disputed the allegations made against our company,” the company said in a statement. “As a family-owned business, our mission is and always will be helping underserved populations in our community obtain proper health care. We agreed to settle this dispute in order to put this matter behind us so it does not distract from that mission. We are eager to move forward and to continue serving our neighbors in the Milwaukee community.”

In an article in the Milwaukee Business News, Hayat was noted to have 19 of its locations in underserved neighborhoods with its median patient income less than $18,000. The company said it serves more than 70,000 Medicare and Medicaid patients annually, providing more than 700,000 prescriptions to that group alone.

“Medicare and Medicaid only pay for prescription medications that are needed by patients, not prescriptions dispensed by pharmacies simply to increase their profits,” said United States Attorney Richard G. Frohling, who announced the settlement. “This settlement imposes a significant penalty on Hayat Pharmacy and will make the federal government whole for the pharmacy chain’s wrongdoing.”