Caremark, a pharmacy benefit management company, agreed last week to pay $6 million to the Department of Justice to resolve allegations that it violated the False Claims Act.

According to the allegations, 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.

Under law, private insurers, rather than the government, must assume the healthcare costs for so-called “dual eligible” individuals, those who are covered by both Medicaid and a private health plan. If Medicaid erroneously pays for the prescription claim of a dual eligible, Medicaid is entitled to seek reimbursement from the private insurer or its PBM. 

Caremark served as the PBM for private health plans who insured a number of individuals receiving prescription drug benefits under both a Caremark-administered plan and Medicaid.  According to the government, Caremark’s RxCLAIM computer platform allegedly failed to pay the full amount due on certain claims, because it improperly deducted certain co-payment or deductible amounts when calculating payments. The government alleged that Caremark’s actions caused Medicaid to incur prescription drug costs for dual eligibles that should have been paid for by the Caremark-administered private health plans rather than Medicaid.     

The allegations arose from a lawsuit filed by Donald Well, a former Caremark employee, under the whistleblower provisions of the FCA, which allows private citizens to bring lawsuits on behalf of the government for false claims and share in any recovery. Well will receive $1 million for the tips he provided.

Since January 2009, the Justice Department has recovered a total of more than $22.4 billion through FCA cases, with more than $14.2 billion of that amount recovered in cases involving fraud against federal health care programs.

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