The Pill Club, an online women\u2019s pharmacy, has reached an $18.3 million settlement with California authorities over claims it defrauded the state\u2019s Medicaid program by prescribing birth control pills without adequate consultation and shipping tens of thousands of female condoms to customers who didn\u2019t want them.\u00a0<\/p>\n

Attorney General Rob Bonta announced the agreement Tuesday, a day after a state court unsealed a whistleblower complaint<\/a> against The Pill Club, which markets convenient reproductive health services to women nationwide. The whistleblowers\u2019 complaint alleges the Silicon Valley company also bilked private health insurers in at least 38 states, including California.\u00a0<\/p>\n

The Pill Club agreed to pay $15 million to the state Department of Justice and $3.3 million to the Department of Insurance. California officials said they believe it\u2019s the first such enforcement action against the company. The Pill Club formed in 2016 as an online-only pharmacy distributing birth control pills and other contraceptives. It serves more than 3 million customers nationwide, according to its website<\/a>.\u00a0<\/p>\n

Liz Meyerdirk, The Pill Club\u2019s CEO, said in a statement that she is \u201cglad 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.\u201d 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.\u00a0<\/p>\n

The whistleblower complaint was filed in 2019 by two of the company\u2019s former nurse practitioners, Happy Baumann and Cindy Swintelski. They alleged that the company\u2019s nurse practitioners prescribed birth control pills and related products without proper supervision by medical doctors, in violation of California law, as The Pill Club \u201cincreased its profits while putting women\u2019s health in danger.\u201d\u00a0<\/p>\n

Investigators also found the company sent customers \u201cmassive quantities\u201d of the female condoms, sometimes an entire box containing 96 of the barriers, for which the company was reimbursed as much as $2,253.80 for a single delivery.\u00a0<\/p>\n

The whistleblowers and their attorneys will receive nearly $4.6 million from the two state settlements. Justice Department officials said the settlement will cover all the losses to Medi-Cal, California\u2019s Medicaid program.\u00a0<\/p>\n

The whistleblower complaint alleges nurse practitioners \u201crubber-stamped\u201d birth control prescriptions, spending from 15 seconds to a few minutes on each case.\u00a0<\/p>\n

The company billed taxpayers for multiple half-hour live or telehealth counseling sessions, but in truth, investigators and the whistleblowers said, the company\u2019s nurse practitioners had no such interaction with customers. Instead, customers filled out a 23-question health history questionnaire, or \u201cself-screening tool,\u201d on its website. Nurse practitioners looked at the questionnaire, wrote a prescription, the products were sent to the customer, and Medi-Cal was billed.\u00a0<\/p>\n

But the company\u2019s highest profits came from the female condoms, the Department of Justice said in sharing details from its three-year investigation exclusively with KHN. Not only do they bring a high reimbursement rate, but the company also billed Medi-Cal more than 250% of the retail price on average, investigators found.\u00a0<\/p>\n

The problem for The Pill Club was that few of its customers had any interest in female condoms.\u00a0<\/p>\n

A pre-checked box at the bottom of the company\u2019s website sign-in page said customers would receive additional items \u2014 including the condoms \u2014 free if they were covered by their insurance, investigators said. The whistleblower complaint says the deliveries would come with \u201cchocolate and sample gift items.\u201d\u00a0<\/p>\n

Further, investigators said, the company would bundle the condoms with customers\u2019 shipments of monthly hormonal birth control pills and any order for emergency contraception, often known as the \u201cmorning-after pill,\u201d both of which carry low profit margins and reimbursement rates.\u00a0<\/p>\n

But the company sent them anyway, by the dozens, by making it difficult or impossible for customers to opt out, investigators with the state\u2019s Division of Medi-Cal Fraud and Elder Abuse discovered. In all, investigators found nearly 37,000 such condom claims filed for reimbursement through Medi-Cal.\u00a0<\/p>\n

\u201cLmao who does the pill club think I am? A nympho?\u201d said one customer in a Twitter conversation<\/a> discussing the bounty of unsolicited products.\u00a0<\/p>\n

\u201cThe pill club sent me female condoms\u2026 I opened one and bout died,\u201d added another unsuspecting customer.\u00a0<\/p>\n

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The pill club sent me female condoms\u2026 I opened one and bout died \ud83d\ude02\ud83d\ude05<\/p>\n
\u2014 Caitlin\ud83c\udf1e (@caitliinpascal) April 20, 2020<\/a><\/p><\/blockquote>\n<\/div>\n<\/figure>\n
Even after customers told the company to stop, it kept sending the condoms \u2014 and billing Medi-Cal for them, investigators said. The settlement says the company also billed Medi-Cal for emergency contraceptives \u201cin quantities in excess of medical necessity,\u201d and for prescriptions sent to California customers by a Texas-based pharmacy that wasn\u2019t licensed to provide them to California patients.\u00a0<\/p>\n
Bonta, the state attorney general, said the company \u201csiphoned off Medi-Cal funding intended to help vulnerable communities access essential healthcare.\u201d\u00a0<\/p>\n
This story was produced by KHN<\/a>, which publishes California Healthline<\/a>, an editorially independent service of the California Health Care Foundation<\/a>.<\/em><\/p>\n
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