Judge orders CVS to pay $285 million in whistleblower lawsuit

WOONSOCKET, R.I. — On Tuesday, U.S. District Judge Mitchell Goldberg issued another major ruling against Woonsocket-based CVS, marking the second significant legal setback for the company in recent weeks. Both cases were initiated by whistleblowers who alleged fraudulent overbilling.

In the first case, Goldberg tripled the damages he had previously ordered CVS Caremark to pay, raising the amount to $285 million, and added a $4.87 million civil fine under the federal False Claims Act.

According to Reuters, Goldberg rejected CVS’ request to reduce the penalty, ruling that while Caremark was liable for only two years of overbilling, “the evidence at trial made clear that the fraud was financially motivated, not the result of some innocent or mistaken belief.”

The case was brought by Sarah Behnke, a former chief actuary for Medicare Part D at Aetna. She alleged CVS Caremark caused health insurers, including Aetna, to submit inflated claims to the Centers for Medicare and Medicaid Services (CMS) starting in 2010, while pharmacies such as Rite Aid and Walgreens were underpaid.

Goldberg’s decision follows another major blow for CVS last month, when a Manhattan federal judge ordered its Omnicare unit to pay $948.8 million in a separate whistleblower lawsuit involving fraudulent billing. In that ruling, U.S. District Judge Colleen McMahon imposed a $542 million penalty for more than 3.3 million false claims filed between 2010 and 2018 and awarded $406.8 million in damages, three times the jury’s earlier award of $135.6 million.

CVS also faces a sweeping lawsuit from the U.S. Department of Justice over its role in the opioid crisis. That case has political ties in Rhode Island, as expected Democratic gubernatorial candidate Helena Foulkes served as CVS president during part of the period when federal officials allege violations occurred.

In addition, a December investigation by The New York Times linked CVS to secret payments from opioid maker Purdue Pharma. According to the report, CVS was among several companies that accepted undisclosed payments from Purdue in exchange for removing certain safety restrictions.

CVS to pay $285 million lawsuit.