The Pill Club Reaches $18 Million California Settlement Over Fraud Allegations
California Attorney General Rob Bonta recently announced a settlement with The Pill Club, an online women’s pharmacy, over allegations that the company defrauded Medi-Cal by prescribing birth control pills without adequate consultation and shopping tens of thousands of female condoms to customers who did not request – and sometimes did not want – them.
The $15 million settlement stems from a whistleblower complaint filed by former nurse practitioners at The Pill Club. The former employees alleged that the company knowingly and routinely defrauded insurers – public and private – by failing to provide physician supervision for contraceptive services and by over-billing for contraceptive products.
The former employees further alleged that The Pill Club: (a) billed for female condoms in quantities in excess of medical necessity; (b) billed for emergency contraceptives in quantities in excess of medical necessity; (c) billed for asynchronous telemedicine medical visits improperly coded as synchronous visits; and (d) billed for prescriptions dispensed and sent to Medi-Cal beneficiaries by MedPro Pharmacy, LLC, a Texas pharmacy not then-licensed to provide pharmacy services to California patients.
When citing specific instances, the relators alleged that The Pill Club billed Medi-Cal for half-hour live or telemedicine counseling sessions when in reality, nurse practitioners working with The Pill Club would “rubber stamp” birth control prescriptions, spending only a few seconds or minutes on each case. Customers of The Pill Club would fill out a 23-question health history questionnaire online, nurse practitioners reviewed it, and the products were sent to the customer with Medi-Cal receiving the bill.
With respect to the billing beyond what was “medically necessary,” The Pill Club had a pre-checked box at the bottom of its online sign-in page that said customers would receive additional items for free if they were covered by insurance. This included the female condoms, chocolates, and even sample gift items. The condoms were a profitable endeavor for the company, as they had a high reimbursement rate and were billed at more than 250% of the retail price (on average). They were often sent in shipments of customers’ orders of birth control pills and emergency contraception, as those products were often sold at a low profit margin and reimbursement rate. These shipments continued even when they were requested to stop by the customer. Investigators found almost 37,000 condom claims filed for reimbursement through Medi-Cal.
In addition to the $15 million settlement with the State of California Department of Justice, The Pill Club entered into a $3.275 million settlement with the State of California Department of Insurance resolving similar allegations, namely that The Pill Club: (a) used billing codes that represented an in-person visit occurred when it was performed via telemedicine; (b) used billing codes that inaccurately reflected the amount of time providers spent with patients; (c) used place of service modifiers that indicated patient visits occurred in-person; and (d) submitted and caused to be submitted false claims for reimbursement to California commercial insurers for prescriptions for FC2 female condoms.
Liz Meyerdirk, The Pill Club’s CEO, said in a statement that she is “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.” The company, which denied wrongdoing, noted that California is not requiring it to change its business practices. However, it said it has improved its billing and taken steps to make sure customers receive only products they request.