Caremark LLC has agreed to pay $6 million to settle a False Claims Act (FCA) suit brought by whistleblower Donald A. Well, a former Caremark claims manager. While the company denied any wrongdoing and indicated that it agreed to the settlement to “avoid the expense and uncertainly of protracted litigation,” Well alleged that Caremark knowingly failed to reimburse Medicaid for prescription drug costs paid on behalf of Medicaid beneficiaries who also were eligible for drug benefits under Caremark-administered private health plans—so called “dual eligibles.”
Under Medicaid reimbursement laws, private insurers, rather than the Medicaid program, must assume the costs of health care and prescriptions for dual eligibles, and in those instances where Medicaid has erroneously paid for a prescription for such persons, the government is entitled to seek reimbursement from the private insurer or its Pharmacy Benefit Manager (PBM).
The Caremark settlement marks yet another instance in which whistleblowers and the DOJ have targeted pharmacies and PBMs for FCA litigation. Entities across the pharmacy spectrum, including Omnicare Inc., Express Scripts Inc., Walgreen Co., and even retailers Wal-Mart Stores Inc. and Kmart Corp., which offer in-store pharmacies, have been subject to FCA suits in recent years. The scope of the compliance problem for pharmacies was described in an August Corporate Compliance Briefing post (“Pharmacies and Pharmacy Benefit Managers Should Look to Their Compliance Programs as the Number of Whistleblower Suits Grows”). The Caremark settlement provides yet another example for pharmacies and PBMs nationwide of the need for continual assessment of compliance programs by those familiar with recent regulatory changes and case law.
By Nicole Waid of Roetzel