Whistleblower Complaints Lead to New Medicaid Fraud Investigation Against CVS

Recent whistleblower complaints reveal that Rhode Island-based CVS Caremark may have violated the terms of an $80 million settlement resolving allegations that the pharmacy chain engaged in a Medicaid fraud scheme. The pharmacy chain is accused of overbilling Medicaid, changing patients’ permissions without authorization, and even using blow dryers to remove mailing labels and resell returned medications.

Whistleblowers Accuse CVS of Billing Medicaid for Unauthorized Prescription Refills

The whistleblowers have raised complaints that CVS has continued to refill prescriptions without customer permission and bill Medicaid for those refills. Although CVS claims to restock the medications and reverse the Medicaid billing, customers have expressed doubts. Federal authorities are investigating whether CVS has violated prior settlements with the government.

CVS handles 20 percent of all U.S. prescriptions, or approximately 800 million each year, through drugstore and mail sales. In addition to its 7,400 U.S. drugstores, the pharmacy chain also manages drug benefits for over 60 million employees of major U.S. employers, including the federal government, and health plans such as Aetna Inc. Last year alone, CVS had profits of $3.5 billion, according to the Los Angeles Times.

CVS is required to follow the monitoring requirements imposed by two previous settlements with the Justice Department. The prior settlements were the result of allegations made by employee whistleblowers, CVS pharmacists who were aware of the wrongdoing through their work for the pharmacy chain. Pharmacists for a mail-order facility in Florida accused the pharmacy claim of putting profits ahead of patients, illegally reselling returned drugs to unsuspecting patients and even, in some cases, billing Medicaid twice for the same medications.

In 2008, the pharmacy chain entered a corporate integrity agreement to settle claims that it had made a practice of improperly switching Medicaid patients to a more expensive stomach drug. The agreement required additional employee training, additional reporting to the federal government, and regular reviews by a third-party organization. Just last year, CVS settled separate allegations that the pharmacy chain used a computer program to inaccurately bill the Medicaid program.

Whistleblowers Bring Prescription Medicaid Fraud to Light

Whistleblowers have a very important role to play in stopping Medicaid fraud. The two pharmacists who came forward in this case have prompted a federal investigation of potential Medicaid fraud by a major U.S. pharmacy chain.

The False Claims Act can be complex, but whistleblowers should understand their legal rights under the Act. Waters & Kraus’ highly skilled attorneys have decades of experience working with whistleblowers. Email us or call our whistleblower attorneys at 800.226.9880 to learn more about our practice and how we can assist.