In 2007, Donald Well, a 25-year U.S. Air Force veteran, filed a False Claims Act qui tam complaint against Caremark and its subsidiaries, alleging that they had failed to reimburse Medicaid for prescription drug costs paid on behalf of Medicaid beneficiaries who also were eligible for drug benefits under Caremark-administered private health plans. Under federal law, when dual eligible coverage exists, federal health care programs, such as Medicaid, are payers of last resort. Accordingly, if Medicaid erroneously pays for the prescription claim of a dual eligible, Medicaid is entitled to seek reimbursement from the private insurer or its PBM.
According to the government, Caremark’s RxClaim computer platform failed to pay the full amount due on certain claims because it improperly deducted certain co-payment or deductible amounts when calculating payments. According to Mr. Well’s Medicaid fraud qui tam complaint, he uncovered this alleged computer problem in October 2004 when he was tasked with auditing and taking over management of the governmental claims processing of the RxClaim computer platform.
Notably, Mr. Well alleged in his complaint that he repeatedly brought this issue to the attention of senior management. Ultimately, after three years passed, he reached outside of the company and filed a False Claims Act qui tam action in February 2007.
Another seven years would pass before the federal government filed a Notice of Intervention and Settlement on September 22, 2014. Caremark ended up paying $6 million to resolve Mr. Well’s False Claims Act allegations, with Mr. Well receiving a reward of $1.02 million plus interest.
More information for whistleblowers is located at the Nolan Auerbach & White website.