WOONSOCKET, R. I — CVS Caremark, CVS Health’s pharmacy benefit manager, has been ordered by a federal judge to pay $289.9M in damages and penalties over allegations that the company overbilled Medicare for prescription drugs.
In a Tuesday decision, Chief Judge Mitchell Goldberg in Philadelphia federal court tripled to $285 million the damages he had ordered CVS Caremark to pay in June, citing the federal False Claims Act. He added a $4.87 million civil fine.
Goldberg rejected CVS' request to pay less, saying that while CVS Caremark was liable for only two years of overbilling, evidence at trial "made clear that the fraud was financially motivated, not the result of some innocent or mistaken belief."
Goldberg, who presided over a non-jury trial related to the case in March, added that evidence "made clear that the fraud was financially motivated, not the result of some innocent or mistaken belief."
Bill Schiffner
"We are pleased that the Behnke ruling in June was in our favor as to certain issues for CVS Pharmacy and CVS Health Corporation’s liability, and disappointed the Court found against Caremark on other issues. We plan to appeal," said a CVS spokesperson.
For additional background, here’s how the company described the litigation in their 10-Q at the end of the 2nd Quarter of this year:
- United States ex rel. Behnke v. CVS Caremark Corporation, et al. (U.S. District Court for the Eastern District of Pennsylvania). In April 2018, the Court unsealed a complaint filed in February 2014. The government has declined to intervene in this case. The relator alleges that the Company submitted, or caused to be submitted, to Part D of the Medicare program Prescription Drug Event data and/or Direct and Indirect Remuneration reports that misrepresented true prices paid by the Company’s PBM to pharmacies for drugs dispensed to Part D beneficiaries with prescription benefits administered by the Company’s PBM. Following a two-week trial, the Court issued a split decision and ruled that the Company was liable under the False Claims Act as to certain claims. The Court has awarded damages and has invited briefing as to trebling under the statute and any applicable penalties and accordingly the Company recorded a litigation reserve related to this matter in the three months ended June 30, 2025. Once the Court enters judgment and sets a final award, the Company intends to appeal.
