CVS Subsidiary Omnicare Files for Chapter 11 Bankruptcy.

CVS filed bankruptcy because its subsidiary Omnicare was ordered to pay nearly $949 million in penalties and damages. This was due to Omnicare being found liable for submitting fraudulent claims related to prescription drugs dispensed to people in long-term care facilities. The lawsuit alleged that Omnicare's pharmacies routinely billed government-funded programs like Medicaid and Medicare for drugs dispensed with expired or invalid prescriptions.

Omnicare was hit with a civil judgment of about $948.8 million after a jury found it had submitted fraudulent prescription claims to Medicare/Medicaid for prescriptions that were expired or lacked required refills, among other violations. A federal court determined that Omnicare, acquired by CVS Health in 2015, had filed over three million false claims to federal healthcare programs, including Medicare, Medicaid, and TRICARE, between 2010 and 2018. This involved dispensing prescription drugs based on expired or invalid prescriptions and improperly billing government health programs for those drugs.

The lawsuit alleged “technical violations” of pharmacy law, not that patients suffered harm or “didn’t get what they needed,” which is important in how Omnicare is defending itself. More over, CVS Health has been dealing with other litigation as well, including a separate lawsuit in which another subsidiary, CVS Caremark, was ordered to pay damages for allegedly inflating drug prices and overbilling Medicare. Once the judgment came down, efforts to overturn or reduce it apparently failed, leaving the fine as a liability the business needed to address. Bankruptcy provides a legal path to restructure obligations.

It is important to clarify that CVS Health, the parent company, has not filed for bankruptcy. However, one of its subsidiaries, Omnicare, a long-term care pharmacy services provider, filed for Chapter 11 bankruptcy protection in September 2025. CVS itself, outside of Omnicare, continues to operate, but this high-profile bankruptcy highlights ongoing risks in the pharmacy and healthcare services sector.