CVS Caremark Ordered to Pay $290 Million in Medicare Fraud Case

What's Happening?

A federal judge has mandated CVS Health's pharmacy benefit manager, Caremark, to pay nearly $290 million following allegations of Medicare fraud. The case was brought forward by Sarah Behnke, a former Aetna actuary, who accused Caremark of submitting false drug cost reports to Medicare Part D in 2013 and 2014. Chief Judge Mitchell Goldberg of the Philadelphia federal court found Caremark liable in June and has now tripled the damages, ordering Caremark Rx, CaremarkPCS Health, and CVS Caremark Part D Services to pay a total of $289.9 million in damages and penalties. The court also imposed $4.87 million in civil penalties. CVS has expressed disappointment with the ruling and plans to appeal. The fraud involved manipulating drug cost reports, leading to Medicare Part D being overbilled by $95 million.

Why It's Important?

This ruling is significant as it highlights the ongoing scrutiny and legal challenges faced by major healthcare companies in the U.S. The substantial penalty underscores the seriousness of Medicare fraud and the government's commitment to holding companies accountable for financial misconduct. The decision could impact CVS's financial standing and reputation, potentially influencing its operations and stock market performance. It also serves as a warning to other companies in the healthcare sector about the consequences of fraudulent activities, emphasizing the importance of transparency and compliance with federal regulations.

What's Next?

CVS Caremark plans to appeal the decision, which could lead to further legal proceedings and potential adjustments to the penalty. The appeal process may involve additional scrutiny of the evidence and arguments presented by both sides. Meanwhile, interest will accrue on the $289.9 million until the full amount is paid, ensuring compensation for the whistleblower and the government. The outcome of the appeal could set a precedent for similar cases in the healthcare industry, influencing how future fraud allegations are handled.