Federal Ruling: CVS Must Produce Documents Related To Alleged False Claims

September 6th, 2013 by Qui Tam

A federal judge ruled that CVS subsidiary Caremark Rx (revenue of $123 billion in 2012) must produce documents related to its alleged practices of submitting fraudulent Medicare claims.  CVS and the second largest health administration, Medical Card System (MCS) had an agreement dating back to June 2003.  Another CVS subsidiary, Silverscript, agreed to provide a Medicare Part D voluntary prescription drug benefit program three years later. 

The Medicare Part D retail and mail order pharmacy claims paid by MCS between January 1 and December 31, 2006 were audited by Pharm/Dur, per MCS, in February 2007.  Pharm/Dur found 48,702 Medicare Part D claims that Caremark falsely paid for a total cost of approximately $4.3 million to MCS.  They were all given to the Centers for Medicare and Medicaid Services for payment.

Anthony Spay, licensed physician and owner of Pharm/Dur, filed suit in the Eastern District of Pennsylvania, alleging violations of the False Claims Act.  Furthermore, due to contract disputes between MCS and Caremark, litigation ensued in the U.S. District Court of Puerto Rico.  After the defendants moved to dismiss on April 23, 2012, the government filed a statement of interest on September 11, 2012.  CVS’ motion was denied on December 20, 2012.  The government then served the defendants 60 separate requests for document production in March.

On a June 4, 2012 teleconference, Caremark refused to withdraw their objections, but did agree to submit additional documents dating back to January 1, 2008.  The government then filed a Motion to Compel on July 2, 2013 and the motion was partially granted last week.  The ruling states that Spay’s claim that CVS continued to submit fraudulent claims from 2006 to the present does not validate expansion of discovery.  Senior U.S. District Judge Ronald Buckwalter wrote, “Although plaintiff was free to plead with requisite Rule 9(b) specificity that the other practices at issue – failure to review for over-utilization, failure to ensure prior authorizations, and failure to apply negotiated MAC (Medicare Administrative Contractors) pricing – were committed on a nationwide basis, he neglected to do so.”

The rule also states discovery may be pursued by the government on the nationwide claims in Puerto Rico, New York, Ohio, Pennsylvania, Illinois and Florida.

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