Texas AG Pursues Company for Bilking Medicaid

Texas Attorney General Greg Abbott has intervened in a now-unsealed federal “whistleblower” lawsuit against pharmacy benefit manager Caremark Inc. of Nashville, Tenn.

The suit, on file in a San Antonio federal court, alleges the company engaged in an unlawful scheme over many years to avoid reimbursing Medicaid for payments of prescription drugs for individuals who were insured by one of its health plans.

Although the individuals and families covered by the plans Caremark designs and administers were also eligible for Medicaid assistance, Medicaid is always the payer of last resort by law if individuals are already covered by a health plan or pharmacy benefit manager. Abbott seeks to recover dollars Caremark bilked from the Texas Medicaid program through this illegal scheme.

“We intend to send Caremark a past-due bill for its conduct,” said Abbott. “This company schemed to avoid responsibility for its health care obligations to members who were paying premiums. Instead it opted to let the Medicaid program – and Texas taxpayers – cover expenditures it should have covered on behalf of those already insured under its plan. I intend to get those dollars back for Texas.”

A pharmacy benefit manager administers prescription drug benefit plans for insurance companies, employers, managed care organizations and other entities. In doing so, they strive to keep costs low for these clients, sometimes by illegal means.

The suit, also joined by the federal government and the states of Tennessee, Florida and Arkansas, tracks a systematic effort by Caremark to allow Medicaid to pick up the tab for medications acquired by families who were dually covered by both Caremark and Medicaid. State and federal law require health benefit plans to reimburse Medicaid when a claim covered by insurance is paid for by Medicaid.

The practices were brought to light in a 1999 sealed whistleblower lawsuit filed by an employee of Caremark, whose job involved the review of claims processing. The employee complained to the company that legitimate government requests for reimbursement for these unlawful practices were being rejected, but company officials ignored her.

She then filed suit on behalf of the state of Texas and the federal government in a civil action known as a qui tam, which entitles the whistleblower to a percentage of damages collected if the case succeeds.