This Major Pharmacy Chain Operator Just Filed For Bankruptcy And The Reason Couldn't Be Clearer

A company with ties to nationwide pharmacy chain CVS declared bankruptcy two months after it was ordered to pay well over $900 million in fines and damages related to claims it falsely billed Medicare and other federal government programs for improper prescriptions for elderly and disabled people at the long-term healthcare facilities it serves. CVS Healthcare affiliate Omnicare filed a Chapter 11 bankruptcy petition in September 2025 at the U.S. Bankruptcy Court for the Northern District of Texas, listing assets of between $100 million and $500 million and liabilities of between $1 billion and $10 billion. Its biggest listed creditor is the U.S. Attorney's Office in the Southern District of New York, which is owed $948.7 million. That figure comes from a federal judge order that Omnicare pay $406.8 million in damages and a $542 million penalty for filing more than 3.3 million false claims with Medicare, Medicaid, and military health program Tricare between 2010 and 2018.

Omnicare declared in a press statement that the bankruptcy case was filed to resolve that judgment and to examine other issues facing the pharmacy industry. Its president, David Azzolina, also insisted that the case, filed by a former Omnicare pharmacist in New Mexico in 2015 and later joined by the U.S. Attorney's Office in 2019, was over "technical violations" and was "extreme" and there were never any allegations that patients were harmed or deprived of medication. Omnicare and its parent company CVS also insisted it has the $110 million it needs to continue running normally as it seeks to reorganize or sell itself.

One of the most popular drugstores in America, CVS operates more than 9,000 retail pharmacy locations and at least 1,000 primary care clinics across the United States. Omnicare, though, doesn't operate retail neighborhood pharmacies. Founded in 1981 and based in Cincinnati, Omnicare provides pharmacy services for senior citizens at long-term care facilities, senior living communities and elderly under home care. 

Omnicare wasn't part of CVS until 2015 when the pharmacy giant acquired Omnicare in a $12.7 billion deal. Yet prior to that acquisition, between 2009 and 2014, Omnicare has paid out $276 million to settle civil litigation from the federal government and the states over alleged kickback schemes and improper Medicare billings, per reporting from the Cincinnati Inquirer. This includes a $124.2 million settlement with the federal government in 2014 over a suit that accused Omnicare of giving money to skilled nursing facilities in Ohio in exchange for them selecting Omnicare as its Medicare and Medicaid drug provider.

Today, the Trump Administration have implemented big changes to Medicare and shakeups in Social Security in the name of fighting fraud. This includes eliminating phone assistance and implementing a pilot program that will end immediate government funding of some medical procedures from some medical providers in New Jersey, Ohio, Oklahoma, Texas, Arizona, and Washington.