BROOKLYN, N.Y. (CN) - RxAmerica, a CVS subsidiary, agreed Monday to pay $5.25 million to settle claims that it defrauded Medicare's prescription-drug program Part D.
Acquired by CVS Caremark in 2008, RxAmerica faced two separate complaints from the U.S. government filed under the whistle-blower provision of the False Claims Act.
The second case, which was filed in the Western District of North Carolina in 2009, was consolidated last year with a 2008 case filed in the Eastern District of New York.
Neither RxAmerica nor CVS has admitted liability in settling the claims.
To obtain Medicare Part D prescription drug benefits, beneficiaries must enroll in a private drug plan approved by the Centers for Medicare & Medicaid Services. The government says most beneficiaries select their drug plans, which they are locked into for one year, based on the published prices for drugs.
The United States alleged that from Jan. 1, 2007, to Dec. 31, 2008, RxAmerica misrepresented how much it charges for generic prescription drugs. The government allegedly passed these false submissions along to Medicaid beneficiaries, and paid RxAmerica for claims submitted. Meanwhile, RxAmerica allegedly charged significantly higher prices than indicated it its pricing data.
CVS settled a related Federal Trade Commission complaint for $5 million in January. The resolution from the FTC's settlement is being used to compensate beneficiaries.
When overpayments use up all of some customers' annual benefits, the FTC says they get pushed into the dreaded "donut hole" of Medicare coverage in which an individual is responsible for the entire cost of his prescriptions.
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