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RxAmerica Agrees to $5 Million Settlement Surrounding Alleged Medicare Part D Plan False Pricing

Date Published
Nov 01, 2012

Navigating the Medicare system can unfortunately be extraordinarily complicated and difficult.  There are numerous sub-programs within Medicare and they each operate differently and frequently have different sets of rules and regulations.  One such sub-program is the Medicare Prescription Drug Program, more commonly known as Part D.  Part D participants are offered coverage for their prescription drugs, however, in order to obtain the coverage participants need to join a Medicare-approved plan or a Part D plan.  There are many different Part D plans available to participants and each varies in terms of the drugs they cover, the amount they reimburse for those drugs, and the deductibles and co-pays their participants are required to pay.  In order to help them steer through all of the various choices and find the best Part D plan for their specific needs, the Centers for Medicare & Medicaid Services (CMS) has created a Plan Finder tool for participants.  The Plan Finder uses drug pricing information submitted by the Part D plan providers to CMS in order to help participants estimate the cost of each plan based on the specific drugs they would need.

Earlier this month, the Department of Justice announced a $5 million settlement with RxAmerica LLC, a wholly-owned subsidiary of CVS Caremark Corporation and Part D plan provider.  The False Claims Act settlement is one of the first reached involving the Part D plan.  RxAmerica was accused of submitting false prices for some of its drugs to CMS, thereby causing the Plan Finder to have inaccurate information.  As a result, Part D participants were allegedly lead to believe that the prices for RxAmerica’s drugs were lower than they actually were—often causing them to choose RxAmerica as their Part D plan provider.

RxAmerica’s settlement comes on the heels of a $5 million settlement reached between the Federal Trade Commission and CVS relating to similar allegations.  The money from the FTC settlement is being used to compensate the Part D beneficiaries for any overpayments they made as a result of CVS and RxAmerica’s alleged misconduct.

The government was alerted to RxAmerica’s alleged fraud as a result of two qui tam lawsuits that were filed against the company and were subsequently consolidated.  The three whistleblowers from the two cases were all Part D beneficiaries who selected the RxAmerica Part D plan after reviewing the Plan Finder.  The whistleblowers will receive a relators’ share of nearly $1 million from the settlement.

If you are aware of Medicare or Medicaid fraud, it is important to take action to stop it.  Contact the experienced attorneys at Tycko & Zavareei today for more information on the choices available to you.

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