CVS Pharmacy Inc. has agreed to pay $18,282,280 to the United States and the State of California following allegations that it violated both federal and state False Claims Acts by submitting improper reimbursement claims for certain medications to California’s Medi-Cal program. The announcement was made by U.S. Attorney Eric Grant.
CVS operates over 9,000 stores across the country, with more than 1,000 in California. The company regularly submits claims for drugs dispensed to beneficiaries of Medi-Cal, a health care program funded by both federal and state governments that provides services to millions of low-income Californians and people with disabilities.
The case centers on “Code 1” drugs listed on Medi-Cal’s formulary, which require pharmacies to confirm specific diagnoses and maintain appropriate documentation before dispensing. While pharmacies can request approval for off-label use of these drugs, such requests must be submitted with proper justification.
Authorities alleged that CVS failed to ensure required diagnoses were confirmed or documented before dispensing some medications. In certain cases, drugs were provided for unapproved uses but still billed to Medi-Cal as if all requirements had been met.
“This settlement demonstrates our commitment to protect the integrity of this critically important federal-state program serving low-income and disabled citizens of this District,” said U.S. Attorney Grant. “My office will continue working to ensure that pharmacies comply with important program regulations like those at issue here.”
Susan Gillin, Acting Chief Counsel to the Inspector General at the Department of Health and Human Services Office of Inspector General (HHS-OIG), stated: “Proper billing of federal health care programs is essential and underpins the reliability of our health care system. Oversight is key to ensuring that compliance failures are remedied. Although CVS entered into a health care fraud settlement with the United States, CVS did not agree to compliance-related oversight with HHS-OIG through a corporate integrity agreement.”
The resolution also addresses claims brought forward by a former CVS pharmacist under whistleblower provisions in the Federal False Claims Act. These provisions allow private individuals to file lawsuits on behalf of the government and share in any recovery; in this case, the whistleblower will receive about $3.3 million from the settlement.
This outcome follows collaborative work between the United States Attorney’s Office for the Eastern District of California, California’s Department of Medicaid Fraud and Elder Abuse, HHS OIG, and the FBI. Assistant U.S. Attorney Catherine Swann led efforts for the U.S. Attorney’s Office.
It was emphasized that these are allegations only; there has been no determination of liability.
The full settlement agreement is available here: cvs_settlement_agreement_-_executed.pdf
