U.S. Joins States in Caremark Whistle-Blower Lawsuit

The Justice Department is joining several other states in a whistle-blower lawsuit alleging that pharmacy benefits manager Caremark Rx Inc. did not appropriately repay Medicaid and other federal health insurance programs.

The lawsuit, filed in U.S. District Court in San Antonio under the whistle-blower provisions of the Federal False Claims Act, says Nashville-based Caremark knowingly avoided or decreased its obligation to reimburse Medicaid and other federal health insurance programs in dual coverage situations.

The suit was filed by Janaki Ramadoss, a former Caremark employee who worked as a quality assurance representative.

The Justice Department, which joins Arkansas, Florida, Tennessee and Texas in the lawsuit, said Tuesday that it planned to serve the complaint on Caremark within 120 days.

“Caremark strenuously refutes the claims,” the company said in a statement.

According to the lawsuit, Caremark systematically allowed Medicaid to pick up the tab for medications acquired by families who were dually covered by Caremark and Medicaid -- a practice dating to 1999.

In such circumstances, coverage under Medicaid or other federal health insurance programs is deemed secondary to coverage under the private health plan.

“As a pharmacy benefits manager, Caremark believes the plaintiffs are seeking to impose payment obligations on Caremark that are neither appropriate or required by law,” Caremark spokesman Gerard Carney said.