Consumer Fraud

CVS Caremark to pay $6 million to settle whistleblower allegations of Medicaid false claims

whistleblower CVS Caremark to pay $6 million to settle whistleblower allegations of Medicaid false claimsCaremark LLC, a pharmacy benefit management giant operated by CVS Caremark Corporation, will pay the U.S. $6 million to settle allegations brought by a whistleblower under the False Claims Act that the company knowingly defrauded federal and state Medicaid programs by failing to reimburse the taxpayer-funded programs for drug expenses that should have been paid by the private insurer.

Individuals who are covered by both Medicaid and a private health plan are classified as “dual eligible.” U.S. law mandates that the private insurer, rather than taxpayer-funded government programs, must assume the costs of health care for dual eligible beneficiaries.

Should Medicaid erroneously pay for the prescription claim of a dual eligible individual, the program is entitled to seek reimbursement from the private insurer or its pharmacy benefit manager, which administers and manages drug benefits for clients.

According to the complaint, Caremark served as the pharmacy benefit manager for private health plans that insured a number of individuals receiving prescription drug benefits under both a Caremark-administered plan and Medicaid.

The complaint alleges that Caremark’s computer system failed to pay the full amount due on certain claims because it improperly deducted certain co-payment or deductible amounts when calculating payments, causing Medicaid to incur prescription drug costs for dual eligibles that should have been paid for by the Caremark-administered private health plans.

The allegations were brought in a lawsuit filed by Donald Well, a former Caremark employee, under the qui tam, or whistleblower, provisions of the False Claims Act, which authorizes private citizens to sue on behalf of the government for false claims and share in any recovery. Mr. Well will receive $1.02 million plus interest for his role in helping the government recover federal health care funds.


U.S. Department of Justice