CVS Caremark has agreed to pay nearly $20 million to settle claims that the company defrauded state pension systems in California, Florida and Illinois, the Los Angeles Times' "Money & Company" reports (Pfeifer, "Money & Company," Los Angeles Times, 12/16).
Background
Several former employees claimed Caremark defrauded CalPERS of tens of millions of dollars when it held the pension plan's prescription drug benefits contract between 2003 and 2006. In the whistle-blower lawsuit, the former employees alleged that Caremark falsified records, improperly switched patients to less expensive prescriptions and supplied members with drugs that had been returned to the warehouse (California Healthline, 6/21).
Even though CalPERS board members were aware of the allegations, they hired Caremark in June to oversee a drug benefit contract covering about 350,000 members of CalPERS' PPO plan. The contract takes effect in January.
Details of the Settlement
On Friday, the employees' attorneys said Caremark was settling the California lawsuit along with two similar cases in Florida and Illinois.
Under the settlement, Caremark has agreed to pay $6.9 million to CalPERS. Michael Leonard -- a Chicago attorney representing the workers -- said the workers and the state will share the money (Kasler, Sacramento Bee, 12/17).
The rest of the settlement allots $4 million to Illinois and $3 million to Florida. Remaining funds will go toward legal costs ("Money & Company," Los Angeles Times, 12/16).
Caremark's Response
Caremark said there were "no findings of wrongdoing or any admission of liability in any of the cases."
The company said it agreed to the settlement to avoid the costs of further litigation (Sacramento Bee, 12/17).