Whistleblower Claims | False Claims Act | Medicare Oversight

A federal judge has ordered CVS Health’s pharmacy benefit manager unit, Caremark, to pay $95 million following a bench trial in a whistleblower case alleging systematic overcharging of Medicare. This ruling, delivered by Chief Judge Mitchell Goldberg, reinforces the government’s rigorous stance against false claims and highlights the ongoing legal risk for entities administering federal healthcare programs.

Whistleblower Allegations & Judicial Findings

• Origins of the Case
  Filed in 2014 by Sarah Behnke, a former Aetna Medicare Part D actuary, the lawsuit accuses CVS Caremark of manipulating drug pricing between 2010 and 2018—inflating drug claims submitted to CMS while suppressing pharmacy reimbursement, thereby paddering margins (reuters.com).
• Bench Trial Outcomes
  After an eight-day non-jury trial in March, Judge Goldberg issued a 105-page opinion finding that Caremark knowingly managed pricing to benefit its bottom line. While some claims were dismissed, the court held Caremark liable for healthcare fraud—rejecting claims that Aetna’s ultimate responsibility absolved the unit (reuters.com).

False Claims Act Exposure & Financial Stakes

• Initial Judgment
  The court mandated a $95 million payment, marking the direct financial consequence for misconduct under the False Claims Act (FCA) .
• Potential Treble Damages
  Under the FCA, this amount may be tripled to $285 million following additional briefing—potentially giving the whistleblower a substantial share (15–30%) of the recovery (reuters.com).

Broader Legal & Regulatory Impacts

• Whistleblower Strategy Success
  The case reaffirms the power of qui tam suits in exposing systemic fraud. Whistleblowers with access to internal data
  —like former actuaries—can uncover longstanding misconduct that might otherwise evade scrutiny.
• Heightened FCA Enforcement
  Authorities are increasingly scrutinizing Medicare Part D fraud, focusing on overcharges and inaccurate pricing submissions (news.bloomberglaw.com, prnewswire.com, reuters.com, whbl.com). This aligns with other significant actions, including Humana’s $90 million settlement announced last year for similar allegations (reuters.com).
• Pharmacy Benefit Manager Oversight
  CVS Caremark’s defeat puts the spotlight on PBMs, which sit at the intersection of insurers, pharmacies, and government programs. Legal exposure may now expand to other PBMs under similar pricing practices.

Conclusion

The $95 million judgment against CVS Caremark signifies a pivotal moment in healthcare fraud enforcement, particularly in the Medicare arena. It sends a strong signal that manipulating pricing to secure excess federal reimbursements may result in severe financial penalties—and that insider whistleblowers with critical data will continue to play a central enforcement role. As treble damages loom, PBMs and insurers should conduct rigorous internal reviews of pricing submissions and bolster compliance protocols to mitigate FCA risks.