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CVS Caremark to pay $20 million to settle fraud allegations

The pharmacy and prescription drug management company agreed to the payment — which includes nearly $7 million to CalPERS — to settle three whistle-blower lawsuits.

December 17, 2011|By Stuart Pfeifer, Los Angeles Times

Pharmacy and prescription drug management company CVS Caremark Corp. has agreed to pay nearly $20 million to settle three lawsuits involving allegations that it defrauded pension systems in three states, including California's giant pension fund, attorneys said.

The whistle-blower lawsuits, filed by two former CVS Caremark pharmacists, accused the company of reselling returned drugs, changing prescription orders to make them more expensive and submitting false reports about how long it took to fill prescriptions.

Under terms of the settlements, CVS Caremark will pay nearly $7 million to the California Public Employees' Retirement System, $4 million to the state of Illinois and $3 million to the state of Florida. Other money from the settlement covered plaintiff attorneys' fees and costs, the attorneys said in a news release.

The former CVS Caremark workers filed the lawsuits under state laws that encourage employees to expose fraud that victimizes government agencies. Typically, whistle-blowers receive a portion of any settlements as a reward for exposing the fraud.

"It is a great feeling to finally see this matter brought to a successful resolution," said Chicago attorney Michael Leonard, one of the plaintiffs' attorneys. "Even though CVS Caremark of course continues to deny any liability, in my opinion justice has truly been served."

CVS Caremark issued a statement Friday that said there had been no findings of wrongdoing in any of the cases. The settlement enabled the company "to avoid the costs of continued litigation."

In addition to operating 7,000 retail stores, CVS Caremark manages pharmacy benefit services for employers, including prescriptions by mail. The company is the product of a 2007 merger between CVS Corp. and Caremark Rx Inc.

Despite the allegations, CalPERS agreed in June to pay CVS Caremark $575 million per year to provide prescription drug benefits to 346,000 members.

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