Ahold Delhaize Settles Allegations of Inflated Drug Price Reporting for $40 Million

Ahold Delhaize Settles Allegations of Inflated Drug Price Reporting for $40 Million 

On June 10, the US Department of Justice (DOJ) announced that Ahold Delhaize USA Inc. agreed to pay $40 million to the United States and participating states to resolve False Claims Act (FCA) and related state-law allegations stemming from its reporting of inflated pricing for its prescription drugs to Medicaid, Medicare, and TRICARE. 

The DOJ alleged that Ahold Delhaize supermarkets with in-store retail pharmacies, such as Giant, Hannaford, Stop & Shop, and Food Lion, ran discount programs offering lower drug prices to enrolled members but did not account for those lower prices when billing federal health care programs. The government claimed that Ahold Delhaize’s failure to report its discounted prices as “usual and customary” caused those health care programs to overpay on covered prescriptions.

The federal government will receive approximately $32.9 million of the total recovery, with the balance going to participating states. The matter originated as a whistleblower action filed by Lawrence LaBenne, a pharmacist who worked at an Ahold Delhaize supermarket in Pennsylvania. As the qui tam relator, LaBenne is entitled to receive roughly $6.1 million from the federal portion of the settlement. 

The claims resolved by the settlement are allegations only and there has been no determination of liability.

The case is U.S. ex rel. LaBenne v. Koninklijke Ahold Delhaize N.V., et al., Civil Action No. 18-CV-925 (W.D. Pa.).

The DOJ’s press release about this settlement is here.

Broadway Electric, Cornerstone Contracting, and Executives Agree to Pay $21.3 Million FCA Settlement Over Alleged Misuse of Veteran Set-Aside Contracts

Broadway Electric Inc., Cornerstone Contracting Inc., CEO John Oehler, and president Christian Blake agreed to pay $21.3 million to resolve FCA allegations that they fraudulently acquired government contracts earmarked for service-disabled veteran-owned small businesses and other eligible small businesses.

According to the DOJ, between April 2017 and May 2025, the parties engaged in a scheme to obtain federal set-aside contracts for which Broadway and Cornerstone were not eligible. Neither Oehler nor Blake are service-disabled veterans, nor are they qualified to own or control service-disabled veteran-owned businesses. 

Broadway and Cornerstone admitted to identifying contracting opportunities and preparing bids submitted in the names of purported qualifying small businesses, including through various organizational structures. Broadway and Cornerstone further admitted to securing bonding, selecting subcontractors and other personnel, and primarily controlling the execution of the projects and financial administration. The purported small businesses were compensated with flat fees amounting to 1-3% of contract revenue, while the remainder went to Broadway, Cornerstone, and selected contractors.

The case is United States ex rel. Welch, et al. v. American First Contracting Inc., et al., No. 3:23-CV-0525 (N.D.N.Y.).

The DOJ’s press release about the settlement is available here.

Manhattan Fund Manager Sentenced to Four Years for Pre-IPO Investment Fraud

On June 8, the head of a New York City–based investment advisor and private equity firm was sentenced to four years in federal prison for defrauding clients who believed they were gaining access to shares in privately held companies ahead of initial public offerings (IPOs).

Giovanni Pennetta, 51, pleaded guilty in March to wire fraud charges arising from what prosecutors described as a six-year scheme targeting investors seeking pre-IPO exposure. According to the government, Pennetta marketed his private equity fund as a vehicle for acquiring economic exposure to companies that had not gone public. In reality, he lacked access to the shares he was selling, and the fund did not deliver the promised exposure. More than $10 million in investor capital was diverted, with a significant portion ending up in Pennetta’s personal bank account.

Pennetta was ordered to pay nearly $12 million in restitution and roughly $12.5 million in forfeiture. 

The press release by the US Attorney for the Southern District of New York is available here.

GS Labs Agrees to Pay Nearly $5 Million Over Alleged Price Gouging and Deceptive Practices 

On June 10, the Minnesota Attorney General’s Office announced that GS Labs, LLC agreed to pay approximately $4.88 million to resolve allegations by an 18-state coalition that the company engaged in unfair and deceptive practices in connection with its COVID-19 diagnostic testing services. 

The coalition alleged that between 2020 and 2022, GS Labs intentionally advertised inflated “cash prices” for COVID-19 tests that were used to overcharge patients covered by insurance. Customers who purchased a test kit at a “discounted” cash price still paid above market rate due to GS Labs’ alleged inflation. GS Labs also allegedly advertised that patients with insurance would not have out-of-pocket costs, yet the company still charged administrative fees as high as $49 per COVID-19 test. The multistate coalition also alleged that GS Labs guaranteed test results within three days but failed to deliver on that promise, forcing customers to wait up to a week or longer for test results. 

Under the terms of the settlement, GS Labs will pay $3,628,718.34 in consumer restitution across the 18 participating states, covering three categories of affected consumers: (1) consumers charged administrative fees (totaling $1,749,568.35), (2) consumers who paid out-of-pocket more than the agreed-upon rates for the COVID-19 tests (totaling $1,845,457.99), and (3) consumers who did not receive COVID-19 test results within the advertised three-day window (totaling $33,692). GS Labs is also required to pay $1,250,000 in attorneys’ fees and costs to the multistate coalition. 

The claims resolved by the settlement are allegations only and there has been no determination of liability.

The press release by the Attorney General of the State of Minnesota is available here.