The 10 Biggest CVS Health Lawsuits in Company History
Previously called CVS Caremark Corporation and CVS Corporation, CVS Health Corporation is an American healthcare company. It owns several brands, including the pharmacy benefits manager, CVS Caremark; a retail pharmacy chain, CVS Pharmacy; and a health insurance provider, Aetna. It is a huge company and one of the biggest employers in the United States private sector. In fact, it is ranked number 7 on the Future Global 500 and number 4 on the Fortune 500 lists. Consumer Value Stores (CVS) is the brainchild of three partners. Ralph Hoagland and brothers Sidney and Stanley Goldstein founded the company in 1963 as a chain of beauty and health aid stores. Later on, they added the pharmacies, and the company grew over the years to what we know it today. As with many large companies, CVS has been sued several times by unsatisfied or aggrieved parties. Let’s take a look at the biggest Lawsuits of all time.
10. CVS Caremark Deceptive Pricing FTC Charges
CVS Caremark was fined $5 million in January 2012 on charges from the Federal Trade Commission that it had misrepresented prices of some medications at Walgreens and CVS pharmacies. The medications, which were Medicare Part D prescription drugs, included drugs used to treat epilepsy and symptoms of breast cancer. The charge and subsequent fine were a huge hit on CVS Health as a whole.
9. Caremark RX Health and Medicare Fraud
For many years, CVS has been criticized for its discount programs. Caremark RX was involved in several Medicare fraud and health fraud scandals during the late 1980s and early 1990s. The company was forced to settle the dispute with the government, in total having to pay more than $250 million in fines. Years later, in 2015, the company was sued over HSP, which saw the program terminated in 2016. The HSP program allowed members access to discounts on a wide range of generics by paying a monthly fee to the company. This resulted in a class-action suit with the Securities and Exchange Commission. In this case, CVS confirmed that it would be fighting the charges.
8. Privacy Violations FTC Charges
In 2009, CVS Caremark was again facing Federal Trade Commission charges for privacy violations. The filings claimed that the company failed to take appropriate and reasonable security measures to protect sensitive medical and financial information belonging to its employees and customers. This breach was in violation of US federal law. In a separate but related case, the company agreed to a $2.25 million settlement with the Department of Health and Human Services over allegations of violating the Health Insurance Portability and Accountability Act (HIPAA).
7. Consumer Fraud CFI Lawsuit
CVS was sued by the Center for Inquiry in July 2018 for consumer fraud. The lawsuit cited the company’s sale of homeopathic medicines, which the Inquiry’s Vice President and General Counsel Nicholas Little called ‘a total sham.’ Little said that CVS was aware of the lack of credibility in the field of homeopathy but continued to deceive its consumers about the effectiveness of the medicines. CVS was shelving homeopathic medicines next to scientifically-proven medications under the same signs for conditions like sleep apnea, flu, and common cold. In fact, the company’s website would suggest homeopathic any time a consumer would search for, say, cold medicine. Little confirmed that CVS was not making the necessary distinction between scientifically vetted medicine and those that have either not been tested or tested and proven to have no medical benefits. In the filing, the Center for Inquiry claimed that allowing consumers to replace evidence-based medications with homeopathic treatments was dangerous to the health and lives of CVS’s customers. It also called the practice a huge waste of money.
6. Whistleblower Suits on Pharmaceutical Kickbacks
Caremark RX was forced to pay $137.5 million in 2005 in a settlement involving several federal lawsuits brought by whistleblowers accusing one of its companies of improper dealings with manufacturers. The suits were about how a company acquired by Caremark RX in 2003 called AdvancePCS was dealing with pharmaceutical manufacturers. According to the whistleblower lawsuits, AdvancePCS had been promoting some products over other rival products and receiving kickbacks from the drug makers whose drugs they promoted. The manufacturers that were passed over had contracts with government programs like Medicare Health maintenance plans, the Mail Handlers Health Benefits Program, and the Federal Employees Health Benefits Program. Both AdvancePCS and Caremark RX have never admitted to wrongdoing in this now-settled matter. CVS Health, however, did revise its formulary revision practices. When determining the co-pay in which to place a drug brand name, the company now considers several factors, such as:
- Bulk discounts
- Low placement on PBM formularies payments from the manufacturer
- Manufacturer rebates
- Average wholesale price (AWP)
- Drug availability
5. Fraudulent Billing (Department of Justice)
The Department of Justice filed a lawsuit against CVS Health and the company’s Omnicare business for alleged fraudulent billing of government programs like Medicare and others for outdated medical prescriptions for the disabled and the elderly. The lawsuit, which was filed by the DOJ in New York on Tuesday, comes in the heels of another whistleblower suit accusing CVS’s Omnicare of using outdated prescriptions for people in long-term care facilities like group homes and assisted living facilities from 2010 to 2018. The business was charged with billing the healthcare programs for these prescriptions involving hundreds of thousands of medications. The plaintiffs in the cause were demanding damages and civil penalties. In response, Joe Goode, CVS spokesperson, said that he did not believe the claims had any merit. “We intend to vigorously defend the matter in court,” he added. He also affirmed that Omnicare’s practices were in line with industry-accepted practices and state requirements. The Department of Justice joined the lawsuit, which was originally filed in 2015 by an Omnicare pharmacist in Albuquerque, New Mexico, called Uri Bassan. The initial whistleblower suit claimed that Omnicare kept dispensing antidepressants, antipsychotics, and anticonvulsants, among other drugs using outdated and invalid prescriptions for years or months. The suit also claimed that the company’s compliance department knew that the dispensing process was using outdated prescriptions instead of getting new ones from the patients’ doctors but just stood by.
4. Blue Insurers Vs. CVS
Six Blues Insurers filed lawsuits against CVS Health for allegedly overcharging them for generic medications and concealing the real cash prices for these drugs. The plaintiffs – the six Blues Insurers – that filed the lawsuit include Blue Shield of Kansas City, Blue Cross Blue Shield of North Dakota and Blue Cross, Blue Cross and Blue Shield of North Carolina, Blue Cross and Blue Shield of Minnesota, Blue Cross and Blue Shield of Florida, and Blue Cross and Blue Shield of Alabama. The insurers claim that CVS used their customer discount programs to charge significantly lower than the actual cash price of hundreds of medications then sought to reimburse themselves by overcharging health plans for the same generic drugs. In one example, CVS charged members of its HSP program $11.99 for a 90-day supply of nadolol and charged Blue Cross North Carolina $256.73 for the same drug in 2015. Court documents record that this was an excess of $244.74 to the Blue Insurer. In response, CVS Spokesperson Michael DeAngelis delivered a statement calling the charges baseless. DeAngelis told FierceHealthcare, “We did not overcharge plans for prescription drugs, and we will vigorously defend against these baseless allegations, which are without merit.”
3. Deceptive Business Practices
The twenty-eight attorneys general filed a lawsuit against CVS’s Caremark – settled in February 2008 – for deceptive business practices. In response to the multi-state civil case, CVS agreed to pay a settlement worth $38.5 million. The attorneys general were led by Douglas Gansler of Maryland and Lisa Madigan of Illinois. They claimed that Caremark deceptively informed physicians that health plans or patients could save money by switching to specific brand-name medications. Despite this advice, however, the switch to the new drug only saved the health plans and patients small amounts or even raised their costs while raising Caremark’s profits. Tom Corbett, Pennsylvania Attorney General, also said that the company also kept rebates and discounts instead of passing them to patients and employers. Caremark also failed to fully inform doctors that the switch would increase the company’s profits or the financial effects it would have on the patients and health plans. Per the settlement, CVS is prohibited from requesting that customers switch prescriptions in specific cases. This includes when the switch will cause an increase in cost for the patient or if the patient’s original prescription is set to expire within six months. The company can also not recommend a switch to patients that have switched to similar medications within the last two years. Patients will also have the choice to reject a switch from their current prescription to the one being offered by CVS.
2. Rhode Island Senate Corruption Case
In one of the biggest CVS Lawsuits, two of its executives, Carlos Ortiz and John R. Kramer, were in 2008 charged with 20 counts of bribery, mail fraud, and conspiracy. The charges were brought in relation to a corruption probe – Operation Dollar Bill – in the Rhode Island General Assembly. Ortiz and Kramer had hired John Celona, former State Senator, as a media consultant and paid him $12,000 annually. Celona was sentenced to 2 and a half years for a corruption case involving several companies, including CVS. While on CVS’s payroll, John Celona was walked out on a pharmacy choice vote in the senate. He originally claimed that the company never paid him for favors but was the star witness in the prosecution case against Ortiz and Kramer. Despite Celona testifying against the two, however, they were acquitted on all counts on May 31, 2008.
1. Contributing to the Opioid Pandemic (Cleveland)
The biggest lawsuit involving CVS to date is based on charges of contributing to the nationwide opioid pandemic. While there are multiple opioid cases against the company from states all over the country, the first one to yield any results was handled by a federal jury in Cleveland. It involves three of the largest pharmacy chains in the country – Walgreens, Walmart, and of course, CVS Health. The jury found that the companies had substantially contributed to the opioid crisis and related overdoses and deaths in two counties in Ohio. This was the first time either company had been held accountable for the pandemic that has lasted decades. Additionally, the verdict was the first from an opioid case jury and encouraged thousands of similar cases around the country. The decision by the Cleveland jury spelt trouble for CVS because all the other cases against the company rely on a similar legal strategy. Plaintiffs claim that the companies involved contributed to what Cornell describes as a public nuisance. Essentially, they must prove that the opioid crisis is covered under public nuisance. According to the New York Times, judges in Oklahoma and California have rejected the public nuisance argument in cases against manufacturers of opioids. The judges ruled that, per the public nuisance laws in their states, the activities by the pharmaceutical companies were not related to the deaths and overdoses closely enough for the laws to apply. However, in the Cleveland case – brought by Trumbull and Lake Counties – the argument was used successfully. The plaintiffs’ lawyers argued that the pharmacies had ignored the many red flags raised by suspicious orders for opioids at both the local pharmacy level and the headquarters where there should have been oversight. Walmart, Walgreens, and CVS all said that they would appeal the jury’s decision. In a response statement, CVS said, “We look forward to the appeals court review of this case, including the misapplication of public nuisance law.”
One of the biggest CVS Lawsuits involves the unfortunate opioid pandemic that rocked the entire country. Mid last year, the attorney general of the Commonwealth of Kentucky brought charges against the company, which alleged that CVS’s practices helped advance the pandemic. This is only one of numerous such charges that have been brought against the company in states all over the United States. In September 2016, Maura Healey, the Massachusetts Attorney General, announced a settlement worth $795,000 that required CVS to check state databases before completing prescriptions for controlled substances like addictive opioids. This was in response to allegations made against the company for failing to give pharmacists access to the Prescription Monitoring Program (PMP) in Massachusetts.