Omlansky v. Save Mart Supermarkets (July 31, 2019, No. C085294) __ Cal.App.5th __ [2019 WL 4072142], certified for publication Aug. 29, 2019

No False Claims Act liability based on 2009 state law capping Medi-Cal billings absent federal approval of the state law.

Matthew Omlansky, a relator, brought a qui tam action against Save Mart Supermarkets alleging False Claims Act violations for seeking reimbursement for prescription and nonprescription medications sold to Medi-Cal patients at rates higher than the rates charged to customers paying cash. Specifically, Omlansky alleged this practice violated a 2009 state statute capping Medi-Cal billings at Save Mart’s “usual and customary price.” (See Welf. & Inst. Code, §§ 14105.45, subd. (b), 14105.255, subd. (b).) The trial court sustained Save Mart’s demurrer and Omlansky appealed.

The Court of Appeal affirmed. Omlansky failed to plead or prove that the 2009 statutory cap took effect since he did not establish that the cap had received federal approval from the Centers for Medicare & Medicaid Services. Absent federal approval, Omlansky was unable to show that, during the alleged wrongful billing period, Save Mart had been required to conform its billings to the 2009 statute. Nor could Omlansky prevail under the pre-2009 statutory regime, which did not cap prescription reimbursements in the fashion Omlansky alleged was required. 

The bulletin describing the Court of Appeal’s decision was originally prepared for the California Society for Healthcare Attorneys (CSHA) by H. Thomas Watson and Peder K. Batalden, Horvitz & Levy LLP, and is republished with permission. For more information regarding this bulletin, please contact H. Thomas Watson, Horvitz & Levy LLP, at 818-995-0800 or htwatson@horvitzlevy.com.