October 3, 2014

DOJ Catch of the Week — CVS Caremark

By the C|C Whistleblower Lawyer Team

This week’s Department of Justice “catch of the week” goes to pharmacy benefit management (PBM) company Caremark LLC.  Last Friday, it agreed to pay $6 million to settle charges of failing to reimburse Medicaid for prescription drug costs that should have been paid for by Caremark-administered private health plans.  Caremark is operated by CVS Caremark Corporation, one of the largest PBMs and retail pharmacies in the country.  See DOJ Press Release.

When an individual is covered by both Medicaid and a private health plan, the individual is called a “dual eligible” and the private insurer must assume the costs of health care.  If Medicaid erroneously pays for the prescription drug costs of a dual eligible, Medicaid is entitled to seek reimbursement from the private insurer or its PBM (which manages the drug benefits for the insurer).  According to the government, Caremark did not comply with this law for numerous dual eligible individuals covered under insurance plans for which it served as PBM.  Specifically, Caremark’s RxCLAIM computer platform allegedly failed to pay the full amount due on certain claims because it improperly deducted certain co-payment or deductible amounts when calculating payments.  Medicaid covered these excluded costs which should have been paid for by the Caremark-administered private health plans.

The charges against CVS Caremark originate from a whistleblower lawsuit filed by Donald Well, a former Caremark employee, under the qui tam provisions of the False Claims Act.  Well will receive a whistleblower award of roughly $1 million.  The settlement does not include any determination of liability or wrongdoing.

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