April 21, 2011

News Release

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

CVS Pharmacy Fined $75 Million for Allowing Large Quantities of Pseudoephedrine Sales
in Violation of Combat Methamphetamine Epidemic Act.

CVS Pharmacy Inc. has agreed to pay $75-million in fines for allowing repeated purchases of a key ingredient in the making of methamphetamine in at least five states that also led to a spike in Southern California drug trafficking, authorities said Thursday.

The largest U.S. operator of retail pharmacies will pay what federal prosecutors said is the largest civil penalty under the Controlled Substances Act.

The company also will forfeit about $2.6-million in profits earned from the sales of pseudoephedrine, which can often be found in cold medicine and is used to make meth.

Authorities said CVS didn’t provide enough safeguards to monitor how much pseudoephedrine someone was buying, and the company violated federal drug regulations Arizona, Georgia, California, Nevada, and South Carolina and possibly 20 other states.

“This case shows what happens when companies fail to follow their ethical and legal responsibilities,” said U.S. Attorney Andre Birotte Jr. “CVS knew it had a duty to prevent methamphetamine trafficking, but it failed to take steps to control the sale of a regulated drug used by methamphetamine cooks as an essential ingredient for their poisonous stew.”

The company was expected to pay the $75-million fine by Friday. The remaining forfeiture is due within 30 days.

          Some executive at CVS should be prosecuted criminally for this gross megligence and maybe this will wise up the industry to
          obey the law

http://flapsblog.com/2010/10/14/cvs-pharmacy-fined-75-million-for-allowing-large-quantities-of-pseudoephedrine-sales- in-violation-of-combat-methamphetamine-epidemic-act/

State Reaches Settlement With CVS

InsideINdianaBusiness.com Report

The state of Indiana has settled a $1.95 million lawsuit with CVS Caremark Corp. (NYSE: CVS) after two of its pharmacists were dispensing prescription drugs for several years with expired licenses. As part of the settlement, CVS has also agreed to implement several consumer protections. Indiana Attorney General Greg Zoeller says the money will be used to reimburse the Indiana Medicaid program and investigative costs.

Press Release

February 9, 2010

INDIANAPOLIS – Indiana Attorney General Greg Zoeller announced that a $1.95 million settlement has been reached in the State of Indiana’s complaint that two pharmacists with expired licenses dispensed prescription drugs for several years at CVS Pharmacy Stores.

The case stemmed from an investigation by the Attorney General’s Medicaid Fraud Control Unit (MFCU). It alleged that at different times between 1997 and 2007, CVS employed as pharmacists two individuals whose licenses had expired: Morris “Mo” Skirvin at a store in Nashville, Ind., and Edward Certain at a store in Marion, Ind.

According to the investigation, Skirvin’s pharmacist license expired in 1990, long before his employer Hook-SupeRx was acquired by CVS, but he did not renew the license and allegedly forged a new one each renewal period.

After MFCU began investigating Skirvin’s license, CVS came forward and disclosed that another pharmacist, Certain, also had been practicing without a license. Certain had a valid license at one time but it expired in 2002 and he did not renew it, MFCU found.

Together, Skirvin and Certain filled an estimated 60,778 prescriptions, the investigation alleged, and the Indiana Medicaid program was overbilled for fees to which the unlicensed pharmacists were not entitled.

“When consumers get prescriptions filled, they do so trusting that the person behind the pharmacy counter dispensing medication is up to date on their licensing. That trust was violated by these two individuals,” Zoeller said. “To its credit, CVS has resolved this situation in a responsible way: First it came forward and acknowledged that a pharmacist with an expired license had been employed at its Marion store. Now CVS will implement a screening program to ensure that none of its pharmacist employees are operating without a license.”

As part of the settlement, CVS also agreed to set into motion several consumer protections: It must verify that pharmacist employees and contractors have valid Indiana pharmacist’s licenses. CVS must require applicants for pharmacist positions to disclose any aliases they have used and whether they are ineligible to hold a license.

Within 90 days of the agreement’s approval, CVS will perform records checks on its Indiana pharmacist employees through the Indiana Professional Licensing Board to verify that all are appropriately licensed. The company will perform similar checks every six months for three years, the agreement says.

On Monday, the Indiana Board of Pharmacy approved a related licensing agreement with CVS that was connected to CVS’s agreement with the Attorney General’s Office.

The $1.95 million settlement with the State, to be paid within 60 days, is not considered a fee or a fine or an admission of wrongdoing; and it will be used to reimburse the Indiana Medicaid program and investigative costs, Zoeller said.

Zoeller thanked his Medicaid Fraud Control Unit, including Deputy Attorney General Nicholas Gonzales, for reaching a solid and fair agreement on the case.

Source: Office of the Indiana Attorney General

Date: Published: 06/19/95
Source: Wall Street Journal. Copyright Dow Jones & Co. Inc.

Caremark Paid Physicians to Obtain
Patients, Government Documents Say

By Thomas M. Burton

Caremark International Inc., which late last week agreed to pay $159
million to settle a four-year federal criminal investigation, signed
contracts with doctors that sometimes were really a "subterfuge" to
disguise payments paid to the physicians simply to obtain patients,
government documents assert.
The government "statement of fact" and other documents, made public
in conjunction with Caremark's agreement to plead guilty to federal
crimes, were filed in federal courts in Ohio and Minnesota. Besides
consenting to the hefty civil damages and criminal fines, the
Northbrook, Ill., health-care company agreed to pay an additional $2
million to a federal grant program for AIDS patients.
Much of the federal inquiry centered on whether Caremark made illegal
kickbacks to doctors to obtain patients. Law-enforcement officials said
while its investigation of the company has ended, the government
continues to investigate doctors in numerous cities and current or
former Caremark executives and employees.
Caremark agreed to plead guilty to mail fraud involving payments to
doctors in Minneapolis and Columbus, Ohio. A government statement of
facts filed in federal court in Columbus said that government evidence
shows Caremark employees "engaged in a scheme and artifice which
involved numerous improper financial arrangements" with doctors.
Caremark's settlement didn't bother Wall Street. The company's stock
closed Friday at $21.875, up $1.875, or 9.4%, in New York Stock Exchange
trading.
Government documents in Ohio said contractual agreements with
doctors, purporting to require doctors to perform medical services for
the payments extended by Caremark, were sometimes "in effect, a sham."
In such cases, the government said, the doctor "did not perform the
duties or work the hours as required by the contracts."
Also, doctors who had treated patients in hospitals would refer them
to Caremark for home intravenous therapy, cancer treatment or hemophilia
therapy.
The government statement of facts filed with the Ohio plea agreement
said Caremark made payments to a Columbus osteopath, Elliot Neufeld, to
obtain nearly $2 million in revenue over five years for the treatment of
AIDS patients. Dr. Neufeld, who is under federal indictment, has denied
the charges against him but declined to comment for this article.
The government document said Caremark at one point paid him $40,000 a
year, purportedly to serve as director of an AIDS therapy center.
However, the document said, clinical employees at the center could
provide evidence that "he seldom went to the facility," and that "they
were unaware of Dr. Neufeld providing any significant services as
medical director." Actually, the government said, Caremark agreements
with Dr. Neufeld were "to induce referrals."
Caremark "corporate officials developed various types of standard
financial agreements which could be entered into with doctors," the
government statement in Ohio said. But, it added, "employees used the
agreement as a subterfuge to disguise the true nature of the payments .
. ., for the referral of patients, not for payment of services
rendered."
In the Minneapolis case, a government filing said, Caremark paid an
endocrinologist 5% of revenue "to induce referrals" of patients treated
with a human growth hormone. The doctor, David R. Brown, has denied the
charges against him.
Caremark's chairman, C. A. Lance Piccolo, said the company "apologizes
and takes full responsibility for the wrongdoing" of "certain
employees."