Caremark settles whistleblower's coordination-of-benefits case for $6 million

by Ben Vernia | September 30th, 2014

On September 26, the Department of Justice announced that the pharmacy benefit manager, Caremark, will pay $6 million to settle claims – originally filed by a whistleblower in a qui tam suit – that the company failed to reimburse Medicaid for prescription drug costs it received for patients who were also eligible for private insurance. According to DOJ’s press release:

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.

* * *

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.

Caremark (or its parent, CVS) has settled several False Claims Act suits in the past, including December 2013, and a similar coordination-of-benefits case in April 2011.

The government announced that the whistleblower, a former Caremark employee, will receive $1.02 million of the settlement (a 17% relator’s share).

Leave a Reply

Recent Posts

Recent Comments