Online birth control pharmacy The Pill Club reached an $18.3 million settlement with California authorities for allegedly defrauding the state's Medicaid program.

According to the California Department of Justice, the company billed Medi-Cal for services it hadn't provided, allegedly submitting claims for 30-minute face-to-face counseling sessions when its nurse practitioners didn't have direct or real-time contact with patients. The California Department of Insurance said the birth control provider would bill for in-person visits when nurses were only reviewing patient questionnaires.

The state DOJ also claimed The Pill Club dispensed female condoms to beneficiaries who didn't want or ask for the contraceptives, billing Medi-Cal significantly above the retail price.

The settlement calls for $15 million to be paid to the DOJ, while $3.3 million will go to the CDI. It comes days after a state court unsealed a whistleblower complaint against The Pill Club, where former nurse practitioners also alleged the company had defrauded private insurers in at least 38 states, including California.

According to a statement from their attorneys, the whistleblowers will receive nearly $5 million from the settlement. 

"The Pill Club unacceptably siphoned off Medi-Cal funding intended to help vulnerable communities access essential healthcare," California Attorney General Rob Bonta said in a statement. "I am grateful to the whistleblowers and our investigators who were instrumental in holding The Pill Club accountable.

"At the California Department of Justice, we fight every day to protect and expand access to healthcare. We will not tolerate companies who attempt to unlawfully enrich themselves at Medi-Cal's expense."

A spokesperson for The Pill Club said it wasn't required to be monitored or change any business practices as part of the settlement, and they noted it wasn't settling in any other states. However, the company plans to improve its billing practices, update measures to ensure patients only receive medications and contraceptives they request, and implement new patient informed consent practices.

"When I joined The Pill Club just over two years ago, I was drawn to the challenge of strengthening our operations to live up to our mission. I’m glad 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," Liz Meyerdirk, The Pill Club's CEO, said in a statement.

THE LARGER TREND

The Pill Club, which launched in 2016, raised a $51 million Series B three years later and another $41.9 million in 2021.

The company briefly changed its name to Favor to highlight its non-contraceptive services, but it returned to its previous branding following a lawsuit from a restaurant and retail delivery company that also used the name.