Caremark Settles Medicaid False Claims for $6M; Whistleblower to Get $1.02M

Posted: 09/26/2014  browse the blog archive
Caremark Settles Medicaid False Claims for $6M; Whistleblower to Get $1.02M

Caremark L.L.C., operated by CVS Caremark Corporation, has agreed to pay the U.S. federal government $6 million to settle allegations that the company knowingly submitted or caused the submission of false claims to Medicaid for prescription drug beneficiaries who were eligible for drug benefits under Medicaid-administered private health plans, the U.S. Department of Justice announced today.

When an individual is covered by both Medicaid and a private health plan, the individual is called a “dual eligible.”  Under the law, the private insurer, rather than the government, must assume the costs of health care for dual eligibles.  If Medicaid erroneously pays for the prescription claim of a dual eligible, Medicaid is entitled to seek reimbursement from the private insurer or its pharmacy benefit management company (PBM).  A PBM administers and manages the drug benefits for clients who offer drug benefits under a health insurance plan. 

Caremark served as the PBM for private health plans who insured a number of individuals receiving prescription drug benefits under both a Caremark-administered plan and Medicaid.  According to the government, 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.  The government alleged that Caremark’s actions caused Medicaid to incur prescription drug costs for dual eligibles that should have been paid for by the Caremark-administered private health plans rather than Medicaid.     

The lawsuit was originally filed by Donald Well, a former Caremark employee, under the whistleblower provision of the False Claims Act.  The Act allows private parties with knowledge of fraud against the government to sue on behalf of the government and share in the recovery. Well will receive $1.02 million plus interest as his portion of the settlement.

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.