By Jonathan Stempel
(Reuters) -A federal judge ordered CVS Health’s pharmacy benefit manager unit to pay $289.9 million in damages and penalties after it overcharged Medicare for prescription drugs.
In a Tuesday decision, Chief Judge Mitchell Goldberg in Philadelphia federal court tripled to $285 million the damages he had ordered CVS Caremark to pay in June, citing the federal False Claims Act. He added a $4.87 million civil fine.
Goldberg rejected CVS’ request to pay less, saying that while CVS Caremark was liable for only two years of overbilling, evidence at trial “made clear that the fraud was financially motivated, not the result of some innocent or mistaken belief.”
CVS, based in Woonsocket, Rhode Island, said on Wednesday it plans to appeal.
Last month, a Manhattan federal judge ordered CVS’ Omnicare unit to pay $948.8 million in a separate whistleblower lawsuit alleging fraudulent billing. CVS plans to appeal that judgment.
Goldberg presided in March over a non-jury trial in the whistleblower case brought by Sarah Behnke, a former head actuary for Medicare Part D at Aetna.
She accused CVS Caremark of having caused health insurers such as Aetna to submit inflated claims since 2010 to the Centers for Medicare and Medicaid Services (CMS), while pharmacies such as Rite Aid and Walgreens were paid less.
CVS argued that the original $95 million in damages was substantial, and punitive damages should be limited to $95 million.
But the judge said CVS Caremark’s fraud not only financially harmed the government, but diminished public confidence in it.
“CMS relies on companies like Caremark to truthfully and accurately report Part D drug prices,” he wrote. “Caremark’s conduct broke CMS’s trust, and as a result, the public’s trust in CMS.”
Behnke sued in 2014. CVS bought Aetna four years later.
The False Claims Act lets whistleblowers sue on behalf of the government and share in recoveries, typically 15% to 30%.
The case is US ex rel Behnke v CVS Caremark Corp et al, U.S. District Court, Eastern District of Pennsylvania, No. 14-00824.
(Reporting by Jonathan Stempel in New York; Editing by Mark Porter)
