Drug Store Chain Pays $1 Million to Settle Medicaid Fraud Whistleblower Lawsuit

CVS Caremark Corp., the parent company of Longs Drug Stores Corp., has settled a False Claims Act lawsuit alleging that Longs Drug Stores fraudulently billed Medicaid health insurance programs in six Western states.

The qui tam lawsuit was filed by a former pharmacy technician with a Longs Drug Store in Walnut Creek, California, who alleged that the drug store chain overcharged Medicaid for prescription drugs and misrepresented the manufacturer of some over-the-counter medications. The whistleblower also alleged that the company fired him when he raised concerns about these practices.

Longs Drug Stores Corp., a Western chain of over 500 drug stores with headquarters in California, was acquired by CVS Caremark Corp. in October 2008.

The Medicaid program, which covers health care expenses for low income patients, is administered by states and jointly funded by the state and the federal government. The suit against Longs Drug Stores claimed that the company overbilled California’s Medi-Cal by charging amounts over the “payment in full” agreed to by supplemental insurers. The lawsuit also charged that in other states, the drug store chain billed Medicaid for amounts greater than a patient’s responsibility for co-pays. The lawsuit also claimed that the company submitted Medicaid charges for more expensive manufacturers’ brands of over-the-counter drugs when in reality, the drug store company had dispensed its cheaper store brand.

According to the terms of the settlement, the whistleblower received $175,000, the U.S. received $210,000, and the State of California received $315,000.
Medicaid fraud has been a major focus of government enforcement actions in recent years. Whistleblowers with knowledge of illicit Medicare and Medicaid billing practices can file suit under the False Claims Act and are entitled to a portion of any settlement or judgment that the government receives as a result.


Waters & Kraus is a national firm with highly skilled lawyers practicing qui tam litigation in four offices, including Dallas, Los Angeles, San Francisco, and Baltimore. Our attorneys have decades of experience successfully representing whistleblowers in a variety of fraud cases. Contact us or call our attorneys at 800.226.9880 to learn more about our practice and how we can assist.

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