CVS pays $17.5 Million to Settle Medicaid Fraud Lawsuit

Stephani LeFlore, as Relator for the United States v. CVS Pharmacy, Inc. -
CVS, the giant retail pharmacy chain, has agreed to pay $17.5 Million to settle a whistleblower lawsuit accusing it of Medicaid fraud.  According to her False Claims Acts lawsuit, CVS pharmacist Stephani LeFlore of Minnesota brought evidence to the government that CVS used a billing system for years that was designed to overbill Medicaid on prescription charges.  The billing was done in relation to dual-eligible customers - those legitimately on Medicaid who also maintained their private health insurance coverage. The insurance coverages required CVS to charge the insurance company a smaller amount for prescriptions, and limited co-pay from the customer. When a person is allowed Medicaid coverage, the government always obtains an assignment of the person's rights under their private health insurance coverage. The government essentially takes over the citizen's rights under the coverage. This includes the common right to pay a smaller co-pay amount on prescriptions.

Ms. LeFlore claimed in her federal and state lawsuits that CVS should only have billed the Medicaid program the same limited co-pay on prescriptions that it would have normally billed the customer under the insurance plan.  She alleged that CVS designed a billing software program for its pharmacies that consistently overcharged Medicaid on these co-pays.  She claimed that these overcharges occurred on hundreds of thousands of prescription sales for well over five years.

The $17.5 Million settlement covers over-billings by CVS in the states of Minnesota,California, Massachusetts, Michigan, Florida, Indiana, Alabama, Nevada, New Hampshire and Rhode Island.

Ms. LeFlore first complained internally, but she was told by a supervisor that “corporate took care of the billing” and that she need not be concerned.
The lawsuit stayed under seal (non-public), according to the False Claims Acts and court orders, until the announcement of this settlement. The civil reward totaled $2,595,460.00.

This case is just another example of the way in which Medicaid fraud occurs.  In my professional experience, usually whistleblowers try to report the fraud internally and hope that the company will "do the right thing" before they actually bring information to the government.  In this case, Ms. LeFlore reported it to CVS and she was told that corporate took care of the billing.  This is another lesson for companies to better their internal reporting structures. 

Claudine Q. Homolash, Esq. is an attorney who represents whistleblowers in a variety of lawsuits, including pharmaceutical fraud and billing.  She can be reached at (215) 790-7379 or chomolash@sheller.com

Claudine Homolash Presents LexisNexis Webinar on False Claims Act

On April 5, 2011, Claudine Q. Homolash presented, with a panel of legal experts, a Webinar on the False Claims Act ("FCA").  The Webinar entitled, "Whistleblowers: Friend or Foe to Industry, Litigation and Society?" was a huge success, with over 160 attendees.  Ms. Homolash's presentation focused on liability under the FCA, newly adopted provisions, and how plaintiffs build a case.

Ms. Homolash represents whistleblowers in a variety of cases, including cases involving off-label marketing, illegal kickbacks and "best price" against pharmaceutical companies.  Ms. Homolash's experience litigating against pharmaceutical companies in the mass tort arena provides her with a legal edge in whistleblower cases against big pharma. 

Contact Ms. Homolash at chomolash@sheller.com or (215) 790-7379 for a free consultation. 

Johnson & Johnson . . .ANOTHER RECALL!

Johnson & Johnson is yanking two lots, or about 57,000 bottles, of its Topamax epilepsy drug (100 mg tablets). These were distributed in the U.S. last fall and winter, but J&J’s Ortho-McNeil Neurologics unit believes only about 6,000 are still circulating. Topamax has recently been in the news because on March 4, 2011, the FDA informed OB/GYN doctors and neurologists about new data demonstrating that infants born to women treated with Topamax during pregnancy have an increased risk for developing cleft palate or cleft lip.

Interestingly, Topamax is also widely prescribed “off-label” for weight management, or night eating. The drug has an appetite suppressant effect.

Why are the lots being pulled? There were four consumer reports of an uncharacteristic odor thought to be caused by trace amounts of TBA (2,4,6 tribromoanisole), a chemical used in wooden pallets that transport and store packaging materials.

J&J maintains no adverse events have been reported. In any event, this latest recall adds to a long and impressive list of products that J&J has pulled over the past year due to assorted manufacturing gaffes - tens of millions of over-the-counter meds, including Tylenol, Motrin and Benadryl; contact lenses, syringes and hip replacement devices.

Makes you wonder who’s in charge of manufacturing these drugs and whether J&J is properly overseeing their manufacture? This could potentially become a big issue for J&J -- let’s not forget the recent whistleblower, Cheryl Eckard, who was the catalyst for an investigation into GlaxoSmithKline’s plant in Cidra that ultimately led to GSK receiving a $750 million fine for manufacturing adulterated medicines.  The whistleblower received $96 million for reporting the misconduct. Watch out J&J ... you could be next!

Claudine Q. Homolash, Esq. is a partner at Sheller, P.C. who represents pharmaceutical whistleblowers, as well those injured by dangerous pharmaceutical products and medical devices. She can be contacted at (215) 790-7379 or at chomolash@sheller.com