CVS Insurance Scandal

There is another insurance-related scandal in the California news this week, this time relating to CVS, the nation’s second largest pharmacy chain. State officials are alleging that CVS Caremark, Inc., refilled customers prescriptions and billed insurance companies without the customers consent.

California CVS customers were surprised to learn that CVS had renewed their doctor’s prescriptions and sometimes enrolled them in automatic refill services, all without their knowledge. The company, which is based in Rhode Island, has a clear policy of requiring the customer’s consent before filling a prescription. Now, the California Board of Pharmacy and the inspector general’s office of the U.S. Department of Health and Human Services (HHS) are both investigating these claims. HHS says these claims impact Medicare, because Medicare is also being billed for prescriptions that patients did not order and did not pick up. This action constitutes Medicare fraud, and these state and federal investigations could lead to criminal charges and local district attorneys becoming involved, as well as the state attorney general and the federal Department of Justice. The Board of Pharmacies also has the power to shut down pharmacies by revoking their professional licenses if the company or individuals have violated the law.

Fraud charges are also possible against CVS under California’s insurance and managed healthcare laws. This case also holds the potential to involve multiple states. New Jersey’s Division of Consumer Affairs is now investigating e-mails sent earlier this year by a CVS executive based in New Jersey, describing an internal quota for prescription refills and threatening pharmacists who missed quotas with “major personnel changes.” CVS acknowledged these emails were legitimate but claimed this was the action of one rogue executive and did not reflect company policy.

Nevertheless, this isn’t the first time CVS has gotten into trouble for insurance issues in California. Last year, the company agreed to pay $17.5 million in a settlement over allegations of falsified Medicaid claims, not only in California but in nine other states as well. In that case, the federal Department of Justice claimed CVS submitted inflated bills to Medicaid, which is healthcare for low-income Americans. Federal and state officials did not pay enough attention to CVS since the company bought Caremark for about $21 billion in 2006, according to David Balto, a former policy director for the Federal Trade Commission. Aside from providing prescription drugs, CVS Caremark also is the leading manager of pharmacy benefits for employers and insurers. Mr. Balto pointed out, “When you have that much control over the market there’s a tremendous temptation to act in ways that aren’t in the best interest of consumers.”

San Francisco Insurance Attorneys
Our insurance attorneys will be interested to see how this CVS case progresses, and to learn more about how customers were affected by this illegal practice. If you are the victim of an insurance scam, either by an insurance company, another company, or an individual who is lying and cheating about providing insurance, contact an experienced California insurance lawyer in your area today. Our lawyers have experience dealing with companies both large and small in an attempt to obtain justice for our clients.