(The Center Square) – A lawsuit between California and neighborhood pharmacy company CVS has been settled for $18.2 million, state Attorney General Rob Bonta announced.
According to a news release issued Monday by Bonta’s office, Rhode Island-based CVS Pharmacy Inc. will pay the fine and restitution. The state and the U.S. Department of Justice alleged CVS submitted false pharmacy claims to Medicaid that resulted in millions of dollars being wrongly paid for CVS patients’ medications.
Pharmacies like CVS can submit reimbursement claims to Medicaid when they dispense prescription medications to patients, according to a news release from the U.S. Attorney’s Office in the Eastern District of California.
Medicaid is known by Medi-Cal in California. Neither the federal Centers for Medicare and Medicaid Services nor the state’s Department of Health Care Services, which runs Medi-Cal, responded to The Center Square’s requests for comment on Tuesday. Medi-Cal is funded by both federal and state money, according to the U.S. Attorney’s Office.
“Today’s settlement holds CVS accountable for its fraudulent drug dispensing and billing practices,” Bonta said. “Pharmacies have an important responsibility to ensure all claims they submit to Medi-Cal are verified, true, accurate, and well documented. These practices ensure safe and cost-effective prescription drug use and are essential in ensuring Medi-Cal funds go to people who actually need them.”
The lawsuit says CVS ran afoul of The Federal False Claims Act by falsely submitting claims for reimbursement to Medi-Cal for customers’ prescription drugs. CVS continues to deny the allegations, according to the settlement.
A total of $18,282,280.08 will be paid by CVS to the United States (more than $8.1 million) and California (more than $10 million). Of the $18 million-plus total, more than $10.7 million is meant to be restitution.
A spokesperson with CVS Pharmacy Inc. told The Center Square via email on Tuesday that the company was pleased to have the matter settled. She added that the company only agreed to the settlement to avoid time-consuming and expensive litigation in court.
“The settlement resolves litigation involving CVS Pharmacy’s compliance with past Medi-Cal Rx policies imposed on pharmacies that were inconsistent with other payors in California and other states,” wrote Amy Thibault, executive director of corporate communications, in the email. “The Medi-Cal policy at issue placed pharmacies in the unusual position of needing to determine coverage eligibility for certain drugs. Medi-Cal Rx has since taken responsibility for this determination, in line with other payors in the industry.”
At least one legislator thinks the settlement is a step in the right direction.
“Transparency and accountability are critically important in health care,” said Assemblymember Dawn Addis, D-San Luis Obispo and chair of the Assembly Budget Subcommittee No. 1 on Health. “As the Health Budget-Subcommittee chair, I hear from countless people who want trust in our health care system restored. Today’s settlement is a clear step forward.”
The Center Square reached out to various legislators who sit on health committees in both chambers, but they were unavailable for comment Tuesday.
“Proper billing of federal health care programs is essential and underpins the reliability of our health care system,” said Susan Gillin, acting inspector general at the U.S. Department of Health and Human Services. “Oversight is key to ensuring that compliance failures are remedied.”
