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Medicaid Fraud: CVS Pays $17.5M to Settle

Stephani LeFlore, as Relator for the United States v. CVS Pharmacy, Inc.
CVS, the giant retail pharmacy chain, has agreed to pay $17.5 Million to settle a whistleblower lawsuit accusing it of Medicaid fraud.  According to her False Claims Acts lawsuit, CVS pharmacist Stephani LeFlore of Minnesota brought evidence to the government that CVS used a billing system for years that was designed to overbill Medicaid on prescription charges.  The billing was done in relation to dual-eligible customers – those legitimately on Medicaid who also maintained their private health insurance coverage. The insurance coverages required CVS to charge the insurance company a smaller amount for prescriptions, and limited co-pay from the customer. When a person is allowed Medicaid coverage, the government always obtains an assignment of the person’s rights under their private health insurance coverage. The government essentially takes over the citizen’s rights under the coverage. This includes the common right to pay a smaller co-pay amount on prescriptions.

 

“This case is just another example of the way in which Medicaid fraud occurs.  In my professional experience, usually whistleblowers try to report the fraud internally and hope that the company will “do the right thing” before they actually bring information to the government.  In this case, Ms. LeFlore reported it to CVS and she was told that corporate took care of the billing.  This is another lesson for companies to better their internal reporting structures.”

 

Ms. LeFlore claimed in her federal and state lawsuits that CVS should only have billed the Medicaid program the same limited co-pay on prescriptions that it would have normally billed the customer under the insurance plan.  She alleged that CVS designed a billing software program for its pharmacies that consistently overcharged Medicaid on these co-pays.  She claimed that these overcharges occurred on hundreds of thousands of prescription sales for well over five years.

The $17.5 Million settlement covers over-billings by CVS in the states of Minnesota,California, Massachusetts, Michigan, Florida, Indiana, Alabama, Nevada, New Hampshire and Rhode Island.

Ms. LeFlore first complained internally, but she was told by a supervisor that “corporate took care of the billing” and that she need not be concerned.
The lawsuit stayed under seal (non-public), according to the False Claims Acts and court orders, until the announcement of this settlement. The civil reward totaled $2,595,460.00.

This case is just another example of the way in which Medicaid fraud occurs.  In my professional experience, usually whistleblowers try to report the fraud internally and hope that the company will “do the right thing” before they actually bring information to the government.  In this case, Ms. LeFlore reported it to CVS and she was told that corporate took care of the billing.  This is another lesson for companies to better their internal reporting structures.

For the Department of Justice press release, see http://www.justice.gov/opa/pr/2011/April/11-civ-485.html

For the actual agreement, see this PDF http://www.healthlawyers.org/Members/PracticeGroups/FA/EmailAlerts/Documents/CVS%20Settlement%20(A1791942).PDF

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