Caremark Will Pay $6 Million to Resolve False Claims Act Allegations
False Cliams Act Qui tam whistleblower to RECEIVE $1.02 Million of the recovery
Caremark L.L.C., a pharmacy benefit management company (PBM), will pay the United States $6 million to settle allegations that Caremark knowingly failed to reimburse Medicaid for prescription drug costs paid on behalf of Medicaid beneficiaries who also were eligible for drug benefits under Caremark-administered private health plans, the Justice Department announced today. Caremark is operated by CVS Caremark Corporation, one of the largest PBMs and retail pharmacies in the country.
“It is vitally important that cash-strapped Medicaid programs receive reimbursement for the costs they incur that should properly have been paid for by other insurers,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division. “We are committed to protecting the integrity of state Medicaid programs.”
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 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 allegations settled today arose from a lawsuit filed by Donald Well, a former Caremark employee, under the qui tam, or whistleblower, provisions of the False Claims Act. The United States may intervene in the lawsuit, as it did here. Under the False Claims Act, private citizens can bring suit on behalf of the government for false claims and share in any recovery. Well will receive $1.02 million plus interest.
The case is captioned United States ex rel. Well v. CVS Caremark, Inc., Civil Action No. SA:11-CV-00747 (W.D. Tex.). The claims settled by this agreement are allegations only; there has been no determination of liability.
Source: Dept. of Justice