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Whistleblower Receives $1.2 Million in $6 Million Settlement of Qui Tam Action Against Caremark For Failing to Reimburse Medicaid for Drug Costs Covered by Both Medicaid and a Private Health Plan

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The Department of Justice announced that Caremark, a pharmacy benefit management (PMB) company, will pay $6 million to settle allegations that it violated the False Claims Act; and the former Caremark employee who blew the whistle on the violations will receive $1.2 million from the settlement. Caremark allegedly knowingly failed to reimburse Medicaid for the cost of drugs for beneficiaries who were covered by both Medicaid and a private health plan. These patients are referred to as “dual eligible” and their private insurer or PMB must assume the cost of the prescription drugs rather than submit claims to Medicaid.

If Medicaid pays for the drugs when a private insurer or PMB should have assumed the cost, the private insurer or PMB must reimburse Medicaid. Caremark caused Medicaid to pay the drug costs when Caremark should have paid.

Donald Well, a former Caremark employee, brought a qui tam action against Caremark and informed the government of Caremark’s wrongdoing. Based on Well’s disclosures, the government intervened in the False Claims Act lawsuit and reached the settlement with Caremark. Well is entitled to $1.2 million plus interest for blowing the whistle on Caremark’s fraudulent activities.

The United States uses the False Claims Act to battle fraud and recoup funds that it pays out as a result of fraudulent and false claims. The government is especially interested in combatting healthcare fraud. Since the initiation of the DOJ’s Health Care Fraud Prevention and Enforcement Action Team (HEAT) in 2009, the United States has recovered more than $14.2 billion in cases involving healthcare fraud.

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