CVS Pharmacy, Inc. Settles with Government for $17.5 Million

On April 15, CVS Pharmacy, Inc. agreed to pay the United States and 10 states $17.5 million to resolve False Claims Act allegations related to Medicaid billings for prescription drugs. These allegations were introduced to the government by a qui tam whistleblower. According to the Department of Justice press release,

The settlement resolves allegations that CVS submitted inflated prescription claims to the government by billing the Medicaid programs in Alabama, California, Florida, Indiana, Massachusetts, Michigan, Minnesota, New Hampshire, Nevada and Rhode Island for more than what CVS was owed for prescription drugs dispensed to Medicaid beneficiaries who were also eligible for benefits under a primary third party insurance plan (excluding Medicare as the primary payor). The United States alleged that rather than billing the government for what the insured would have been obligated to pay had the claims been submitted solely to the third party insurer (typically the co-pay), CVS billed and was paid a higher amount by Medicaid.

CVS entered into a corporate integrity agreement (CIA) with the Office of Inspector General in March 2008 in connection with a separate investigation and settlement. CVS has executed a separate amendment to its CIA that will be in effect for three years to monitor CVS’s implementation of correct billing procedures and the training and education of employees. Moreover, an independent review organization (IRO) will conduct regular audits and issue reports on CVS’s compliance with the terms of the amendment to the CIA.

For more information on pharmacy compliance, government investigations and litigation, please contact Robert S. Iwrey, Esq. at (248) 996-8510 or (212) 734-0128 or visit the HLP website.