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CVS Caremark to pay $20 million to three states over fraud allegations

December 16, 2011 | 12:17 pm

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

The whistleblower 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 went to plaintiff attorneys’ fees and costs, the attorneys said in a news release.

The former employees filed the lawsuits under state laws that encourage employees to expose fraud that victimized government agencies. Typically, whistleblowers 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 did not immediately respond to a request for comment. The company is the product of a 2007 merger between CVS Corp. and Caremark Rx Inc. In addition to operating 7,000 retail stores, the company manages pharmacy benefit services for employers, including prescriptions by mail.

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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-- Stuart Pfeifer

Photo: A CVS store in Florida. Credit: Wilfredo Lee / Associated Press

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