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U.S. Attorney Eric Grant reached an $18.3 million settlement with CVS Health Corp’s (NYSE:CVS) CVS Pharmacy Inc. to resolve allegations that the company knowingly sought Medi-Cal reimbursement for medications without confirming required diagnoses or documentation.
The agreement ends claims that CVS improperly billed California's Medicaid program for prescriptions that did not meet state and federal compliance standards.
CVS, one of the country's largest pharmacy chains with more than 9,000 stores nationwide, regularly processes reimbursement requests for medications dispensed to Medi-Cal beneficiaries.
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The program, which serves low-income residents and people with disabilities, operates through joint federal and state funding overseen by the California Department of Health Care Services.
California uses a Medi-Cal "formulary" to determine whether certain drugs—referred to as "Code 1" medications—require specific diagnoses and documentation before they can be dispensed.
Pharmacies must verify that these prescriptions meet eligibility rules or, if prescribed outside approved criteria, submit a justification for review.
Officials alleged that CVS failed to carry out this gatekeeping responsibility in numerous cases.
According to the settlement announcement, CVS did not consistently verify that required diagnoses were present and, in some instances, dispensed Code 1 drugs for unapproved uses. Prosecutors said the company then billed Medi-Cal despite lacking proper documentation, leading to claims that violated both the Federal False Claims Act and the California False Claims Act.
Part of the payout resolves claims filed by a former CVS pharmacist under the False Claims Act's whistleblower provisions.
The individual, who brought the case, will receive roughly $3.3 million from the recovery.
Price Action: CVS stock is down 0.77% at $77.81 at the last check on Tuesday.
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Posted In: CVS
