CVS Caremark Corporation Settles False Claims Act Allegations for $6 Million

In several prior posts, we have discussed the ongoing battle against “reverse false claims” involving Medicare and Medicaid patients. In general, a reverse false claim occurs when a healthcare provider or government contractor receives overpayment for an invoice and knowingly fails to issue a refund or reimbursement to the government. In general, if a private government service provider receives overpayment, it has 60 days to send the money back – or serious consequences could result.

In today’s case, pharmacy benefit management company Caremark Corp. – which is operated by pharmacy giant CVS – has agreed to pay $6 million to settle False Claims Act allegations it failed to return payments from Medicaid and Medicare that should have been covered by a private insurer. The company has not admitted liability in the matter, however.

Details of case against Caremark, Corp.

Caremark is operated by CVS Caremark Corporation, owner of one of the largest retail pharmacy chains in the United States. So large, in fact, it administers its own private health plans to eligible enrollees. In certain scenarios, an enrollee in a Caremark plan was also eligible for Medicaid coverage, and the plans happened to cover identical services. Under government regulations, when this occurs, the private insurer is required to pick up the tab as opposed to Medicare or Medicaid. If a company fails to cover the employee or submits claims to Medicaid notwithstanding the concurrent private coverage, this could trigger False Claims Act liability.

In the case against Caremark, the relator alleged this exact scenario – and is set to recover $1.02 million for coming forward with allegations of unlawful billing procedures. More specifically, the relator alleged that Caremark knowingly failed to reimburse Medicaid for millions of dollars in payments on behalf of patients who were already covered for drug benefits under its private insurance policies.  According to reports, Caremark’s computer program RxCLAIM failed to pay the full amount owed for prescription drug coverage, prompting the submission of an invoice for the difference to the Medicaid program. Allegedly, RxCLAIM deducted co-payments and deductible amounts when calculating the proper payment, thereby requiring Medicaid to make payments on behalf of privately insured individuals.

Government’s response

Healthcare fraud has been at the top of the government’s watch list for several years, and state and federal authorities have worked closely to combat this type of wasteful misspending. A statement by the Department of Justice’s Civil Division read, “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….We are committed to protecting the integrity of state Medicaid programs.”

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