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Whistleblower Lawsuit: CVS’ Caremark to Pay $4.25M in Pharmaceutical Fraud Case involving Medicaid

To resolve allegations that it purposely did not pay back Medicaid for prescription expenses, CVS’s Caremark will settle the pharmaceutical fraud case with the US and several state governments for $4.25M. The claims were originally brought via a whistleblower lawsuit.

The giant chain is accused of using “Quantum Leap,” a computer system, to disregard when a customer had a third-party payer that could cover a prescription. The processing platform allegedly canceled reimbursement claims turned in by Medicaid for individuals who had this “dual” eligilbity. As a result, Medicaid ended up paying for prescriptions that were the responsibility of other insurers.

Caremark LLC is a pharmacy benefit management (PBM) company that is run by CVS Caremark Corporation. It is the PBM for private health plans that insure individuals with prescription drug benefits under Medicaid and also private plans administered by Caremark.

The law says that when a patient has coverage under both Medicaid and a private health plan, the private insurer needs to take on the healthcare costs. Should Medicaid mistakenly pay for the prescription claim of someone who has dual eligilbilty then it can pursue reimbursement from the insurer or the PBM.

The Medicaid fraud lawsuit was brought by whistleblower Janaki Ramdoss, an ex-Caremark quality assurance representative. As per the terms of the False Claims Act’s Qui Tam provisions, Ramdoss is entitled to a percentage of the recovery. Reuters reports that Ramdoss will be getting $505,680. The federal government will get approximately $2.31 million, and five US states, including Massachusetts will get the rest.

Although CVS denied doing anything wrong, the company said it was settling to avoid the uncertainty and costs that can arise from litigation.

Massachusetts Pharmaceutical Fraud & Whistleblowers
In Massachusetts, our Boston, MA pharmaceutical whistleblower law firm can help you determine whether you should pursue a case for best price fraud, off-label marketing, good manufacturing practice violations, pharmaceutical kickbacks, overbilling, or the distribution/making of compound drugs. Contact Altman & Altman, LLP today.

CVS’ Caremark Will Pay $4.25 Million for Allegedly Denying Medicaid Claims for Reimbursement of Prescription Drug Costs, US Department of Justice, December 13, 2013

The False Claims Act (PDF)

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