CVS Medicare Docs Lose Veil in False Claims Suit

     (CN) – CVS should be compelled to give the government documents related to its alleged nationwide practice of submitting fraudulent Medicare claims, a federal judge ruled.
     The allegations stem from a June 2003 agreement between Medical Card System (MCS), the second largest health administration and insurance firm in Puerto Rico, and CVS subsidiary Caremark Rx.
     SilverScript, another CVS subsidiary, agreed about three years later to provide prescription-benefit-management services to MCS Life Insurance, a sponsor for the Medicare Part D voluntary prescription drug benefit program.
     In February 2007, MCS had a company called Pharm/DUR audit the Medicare Part D retail and mail order pharmacy claims paid by MCS from Jan. 1 through Dec. 31, 2006.
     Pharm/DUR, which is owned by licensed physician Anthony Spay, allegedly identified 48,702 Medicare Part D claims that Caremark had adjudicated and fraudulently paid, with a total cost of nearly $4.3 million to MCS, all of which were submitted to the Centers for Medicare and Medicaid Services for payment.
     Litigation of contract disputes between MCS and Caremark ensued in U.S. District Court for the District of Puerto Rico that year. Spay then filed suit in the Eastern District of Pennsylvania, alleging violations of the False Claims Act.
     The defendants moved to dismiss on April 23, 2012, and the government filed a statement of interest on Sept. 11.
     After Senior U.S. District Judge Ronald Buckwalter denied CVS’ motion Dec. 20, the government served the defendants 60 separate requests for document production in March.
     The defendants responded with 42 pages of responses and objections, and they refused at a June 4 teleconference to withdraw their objections but agreed to add documents dating all the way to Jan. 1, 2008.
     The government moved to compel on July 2, 2013, and Buckwalter partially granted the motion last week.
     Spay’s claim that CVS has continued to submit false or fraudulent claims from 2006 to present does not justify broadening the span of discovery, the ruling states.
     “Such cursory allegations, made on information and belief alone, are unquestionably insufficient to open the door to broad and burdensome discovery into defendant’s nationwide practices over the course of more than seven years,” Buckwalter wrote.
     The judge later added: “when expressly pleading his nationwide claims, plaintiff phrases them in past tense, with no contention that the conduct is continuing” and that “at no point does plaintiff use the language of a continuing violation.”
     Spay’s attempt to expand discovery beyond his original claims – of gender indications, expired National Drug Codes, and missing/false physician push numbers – also failed.
     “Although plaintiff was free to plead with requisite Rule 9(b) specificity that the other practices at issue – failure to review for over-utilization, failure to ensure prior authorizations, and failure to apply negotiated [Medicare Administrative Contractors] MAC pricing – were committed on a nationwide basis, he neglected to do so,” Buckwalter wrote. “Both defendants and this court thus understood the nationwide claims to be cabined to only three areas. Plaintiff cannot now, in an effort to engage in unbridled discovery, unilaterally expand the scope of his amended complaint.”
     The government may pursue discovery on its nationwide claims in Puerto Rico, New York, Ohio, Pennsylvania, Illinois and Florida, the ruling states.
     CVS Caremark Corp., the country’s largest prescription provider, reported more than $123 billion in revenue in 2012.

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