Ahold Delhaize Pays $40 Million to Settle Federal Claims It Overbilled Medicare, Medicaid, and TRICARE on Prescription Drugs

What Happened

Ahold Delhaize USA Inc., headquartered in Quincy, Massachusetts, agreed on June 10 to pay $40 million to the federal government and participating states to resolve False Claims Act allegations tied to how its in-store pharmacies billed Medicare Part D, Medicaid, and TRICARE, according to the Department of Justice.

The DOJ's theory is straightforward: Ahold Delhaize ran member discount programs at the in-store pharmacies inside its Stop & Shop, Giant, Hannaford, and Food Lion locations. Those programs offered lower drug prices to enrolled customers. Under federal rules, pharmacies are required to report those lower, discounted prices as their "usual and customary" price when submitting claims to government healthcare programs.

Ahold Delhaize's pharmacies allegedly did the opposite — billing federal programs at the higher, pre-discount prices. The result, according to the DOJ, was that Medicare, Medicaid, and TRICARE overpaid on covered prescriptions.

Where the Money Goes

Of the $40 million total, approximately $32.9 million goes to the federal government. The remaining balance is distributed to the states that participated in the case, according to the DOJ's June 10 press release.

Lawrence LaBenne, a former pharmacist at an Ahold Delhaize supermarket in Pennsylvania, filed the original whistleblower action under the case caption U.S. ex rel. LaBenne v. Koninklijke Ahold Delhaize N.V., et al., Civil Action No. 18-CV-925 in the Western District of Pennsylvania. As the qui tam relator, LaBenne will receive $6,083,587 from the federal share of the settlement.

What the Government Said

Assistant Attorney General Brett A. Shumate of the DOJ's Civil Division was direct: "If pharmacies report inflated 'usual and customary' prices on claims to federal healthcare programs, the programs pay more than they should on those claims."

U.S. Attorney Troy Rivetti for the Western District of Pennsylvania added that pharmacies are "trusted" with accurate pricing and that this settlement signals the government will pursue what he called "dishonest pharmacies."

Scott J. Lampert, Acting Deputy Inspector General for Investigations at the HHS Office of Inspector General, said inflating prices "puts the integrity of taxpayer-funded programs at risk" and that HHS-OIG will "aggressively pursue such conduct."

What Ahold Delhaize's Position Is

Ahold Delhaize has NOT admitted liability. The DOJ's own announcement, and the ArentFox Schiff analysis, both note explicitly: "The claims resolved by the settlement are allegations only and there has been no determination of liability." Settlements of this kind are common in False Claims Act cases precisely because companies often find it cheaper and faster to resolve the government's claims than to litigate them for years, even when the underlying facts are genuinely disputed. That does not make the allegations proven.

The Strongest Case for the Defense

False Claims Act pharmacy pricing cases frequently hinge on how "usual and customary" price is legally defined, and that definition has been actively litigated across the industry for years. Pharmacies have argued, sometimes successfully, that discount club prices available only to members are not the same as prices charged to the general public, and therefore do not qualify as "usual and customary" under certain interpretations of the applicable regulations. Courts have not uniformly agreed on where that line sits. Ahold Delhaize settling for $40 million tells you the company judged the litigation risk was real. It does NOT tell you the company's legal position was frivolous.

Why This Matters for Taxpayers

Medicare Part D, Medicaid, and TRICARE collectively cover tens of millions of Americans. Every dollar overpaid because of inflated "usual and customary" pricing is a dollar pulled from programs that fund care for seniors, low-income patients, and military families. The government's reimbursement formula depends entirely on pharmacies self-reporting honest prices. When they don't, the entire system overpays, and there is no automatic catch.

The whistleblower mechanism built into the False Claims Act is one of the few tools that actually surfaces this kind of overbilling. The settlement was the result of a coordinated effort between the DOJ's Civil Division, Commercial Litigation Branch, Fraud Section, and the U.S. Attorney's Office for the Western District of Pennsylvania, with assistance from the Department of Health and Human Services, the Defense Health Agency, and state Medicaid programs.

What Comes Next

The open question the settlement does NOT answer: whether Ahold Delhaize's billing practices have been fully corrected across all four grocery chains, and whether federal healthcare programs have any ongoing monitoring mechanism to verify that its pharmacies are now reporting accurate prices going forward. The DOJ's announcement is silent on compliance obligations or corporate integrity agreement terms, if any were attached to the settlement. Those details, if they exist, have not been made public as of June 18.