$4.25 Million for Caremark False Claims Act Case
Yesterday the U.S. Department of Justice (“DOJ”) announced an agreement with Caremark, LLC to settle allegations filed that it defrauded the federal government and five states. Caremark, LLC is a pharmacy benefit management company (“PBM”), operated by CVS Caremark, Corp. a company which is no stranger to the False Claims Act. PBMs are third-party administrators, whose primary role is the payment and process of prescription drug claims on behalf of healthcare plans.
The allegations surfaced in a lawsuit filed by former Caremark employee, Janaki Ramadoss, pursuant to the qui tam provisions of the False Claims Act. The details of the case allege that Caremark knowingly disregarded its obligations to reimburse Medicaid for the costs of prescription drugs received by Medicaid beneficiaries, which should have been covered under the beneficiaries’ private healthcare plans administered by Caremark. Medicaid, commonly referred to as the payer of last resort, is not responsible for health care and prescription costs which are simultaneously covered by a private health care plan. Individuals with overlapping coverage from Medicaid and a private plan are classified as “dual eligible.” In addition to paying for the care and prescriptions of a “dual eligible” beneficiary, private insurers are required to reimburse claims erroneously paid by Medicare. Assistant Attorney General for the Justice Department’s Civil Division, Stuart F. Delery, noted that, “it is vitally important that cash-strapped Medicaid programs receive reimbursement for costs they incur that should have been paid for by other insurers.” By failing to do so, Caremark caused false claims for payment to be submitted to Medicaid.
In addition to the federal government, Arkansas, California, Delaware, Louisiana, and Massachusetts joined the case and will receive proceeds from the settlement. The federal government will receive approximately $2.3 million, while the five states share $1.94 million.
The case is captioned United States ex rel. Ramadoss v. CVS Caremark Inc., SA-12-CA-929WRF (W.D. Texas).