April 21, 2011
CVS Pharmacy Inc. has agreed to pay the state $858,000 to settle a lawsuit over alleged Medicaid fraud. The retail pharmacy is paying out $17.5 million to 10 states and the federal government for allegedly overbilling Medicaid programs for prescriptions drugs. The payment will primarily be used for Medicaid restitution.
Indianapolis, Ind. -- The State of Indiana will receive more than $858,000 from CVS Pharmacy Inc. in the settlement of a whistleblower lawsuit that alleged CVS had overbilled the Medicaid program for prescription drugs, Indiana Attorney General Greg Zoeller announced today.
The settlement is Indiana’s share of a larger $17.5 million settlement CVS reached last week with 10 states and the federal government involving inflated prescription drug claims submitted to the Medicaid program for reimbursement. Under the whistleblower provisions of the False Claims Act in both state and federal law, a pharmacist in Minnesota who first raised the allegations in a private lawsuit will receive 16 percent of the CVS settlement.
“My office has sought to raise public awareness that the False Claims Act is a powerful tool to thwart fraud committed against government programs. It allows a company insider with knowledge of illegal billing practices to file a private lawsuit, into which the state or federal governments can intervene. If a company engaging in fraud later settles or pays a judgment, then the original whistleblower is entitled to a percentage of the recovery, in acknowledgement of the huge risk they took and courage they showed in exposing fraud by their employer against taxpayers,” Zoeller said.
CVS Pharmacy Inc. operates more than 7,000 retail pharmacies in the U.S. The settlement reached last week resolves allegations that CVS Pharmacy billed the wrong amounts to the Medicaid program for dual-eligible beneficiaries – that is, Medicaid beneficiaries who also have third-party prescription coverage. Pharmacies are supposed to bill the other insurer first and then submit a claim to Medicaid only for the amount of the remaining liability, usually the co-pay.
But an investigation by the states, the U.S. Department of Justice and the U.S. Department of Health and Human Services - Office of Inspector General found that CVS billed more than was allowed for certain dual-eligible claims, resulting in CVS being paid a larger reimbursement than it was entitled to. The investigation of the case by the states and federal government involved a complex analysis of billing and payment information, cross-referenced to private insurance payments.
Under the settlement of the civil suit, CVS will pay the federal government nearly $8 million and the 10 states more than $9.5 million combined, plus interest. The total state settlement paid to the Indiana Medicaid program will be $858,176.16, including $572,117.44 for the state’s share of Medicaid restitution and $286,058.72 for additional recoveries. CVS also agreed to sign an amended corporate integrity agreement requiring it to train employees and implement correct billing procedures concerning dual-eligible beneficiaries.
Whistleblowers can file qui tam lawsuits (pronounced “key tam”) under the False Claims Act against companies for fraud against government contracts, including defense contractors, highway contractors and pharmaceutical or health care companies. Such a case would remain sealed while the states and federal governments investigate the plaintiff’s allegations; and the court unseals it if and when the governments intervene. The whistleblower then is eligible for a percentage of any damages or settlement, usually between 15 and 30 percent of the recovery.
Since Zoeller took office in January 2009, the Indiana Attorney General's Office has participated in 14 settlements of whistleblower lawsuits against pharmaceutical companies over their illegal off-label marketing practices. In those 14 cases, Indiana has reached settlements of nearly $24 million in Medicaid restitution and additional state recoveries.
To encourage whistleblowers to file suit and in turn expose health care fraud, Zoeller’s office has raised public awareness about the False Claims Act through informational meetings, outreach to health care workers and attorneys, and a promotional handout, “Blow the Whistle on Fraud.” The effort is overseen by Deputy Attorney General Allen K. Pope, director of the Indiana Medicaid Fraud Control Unit (MFCU). Zoeller, Pope and Supervising Deputy Attorney General Steve Hunt have made several presentations about filing whistleblower lawsuits to meetings of health care employee associations, nursing students and attorneys.
Any health care or pharmaceutical workers who know about fraud and are interested in filing a whistleblower action against a company should first contact a private attorney who specializes in bringing lawsuits under the False Claims Act. There is no guarantee of the individual recovering damages; but filing a private lawsuit is a necessary step in order for states or the federal government to investigate a fraud case and intervene in court. Zoeller urges anyone interested in bringing a whistleblower action to learn more about the process by visiting his web site, www.in.gov/attorneygeneral/2807.htm
Source: Office of Indiana Attorney General Greg Zoeller