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CVS agrees to pay $17.5 million in fraud suit

CVS Caremark Corporation's retail pharmacy division, CVS Pharmacy Inc., recently agreed to pay $17.5 million to the federal government and 10 states following allegations that it violated the federal False Claims Act.

Those allegations were originally brought by a CVS pharmacist in St. Paul, MN, who received 2,595,460 from the whistleblower suit. Sources said that only eight of the 10 states contributed to the woman's qui tam award, as Minnesota and Alabama do not have False Claims Act statutes.

The recent settlement is connected to allegations that CVS over-billed Medicaid programs in various states for prescription medications distributed to Medicaid beneficiaries who were also eligible for benefits under a primary third-party insurance plan. Instead of billing Medicaid what the insured would have had to pay if their claims had been submitted to a third party insurer-which, in most cases, was co-pay- CVS billed and received a higher amount.

Under the agreement, CVS will be paying $7,993,615.55 to the federal government and $9,506,384.45 to 10 different states. The agreement also specifies that the Department of Human Services, Office of the Inspector General, will monitor CVS's billing procedures and training and education of new employees for three years to ensure compliance with their obligations. The agreement also allows for regular audits by an independent review organization.

The agreement is part of the federal government's ongoing effort to deal with health care fraud and to implement the goals of the Health Care Fraud Prevention and Enforcement Action Team, begun by Attorney General Eric Holder and Kathleen Sebelius back in May of 2009.

Source: MD News, "CVS Pharmacy Inc. Agrees to Pay $17.5 Million to Resolve False Prescription Billing Case," 21 April 2011.

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