The United States Attorney for the Southern District of New York, Jay Clayton, announced a $37.76 million settlement with CVS Pharmacy, Inc. to resolve allegations that the company over-dispensed insulin pens and improperly billed government healthcare programs between 2010 and 2020.
According to federal authorities, CVS was accused of violating the False Claims Act by seeking reimbursement from Medicare, Medicaid, TRICARE, and the Federal Employees Health Benefits Program for premature refills of insulin pens. The government alleged that CVS dispensed more insulin than prescribed and under-reported the days-of-supply provided to patients.
Under a settlement approved by U.S. District Judge John G. Koeltl, CVS will pay $24,446,240 to the United States and additional funds to various states. As part of the agreement, CVS admitted responsibility for conduct described in the government’s complaint.
“CVS engaged in a decade-long practice of repeatedly prematurely refilling insulin prescriptions for patients and improperly billing government healthcare programs for more insulin than patients needed,” said U.S. Attorney Jay Clayton. “These programs rely on pharmacies to follow appropriate refill schedules and to accurately report the amount of medicine dispensed, which CVS pharmacies frequently failed to do. This settlement reflects our continued commitment to holding pharmacies to account, enforcing rules designed to keep costs down, and protecting taxpayer dollars.”
Naomi D. Gruchacz of HHS-OIG stated: “Companies that participate in federal health care programs are required to obey laws meant to protect the integrity of program funds, including the responsibility to bill only for services and supplies eligible for reimbursement. Working closely with our law enforcement partners, HHS-OIG will continue to investigate allegations of improper billing to safeguard our taxpayer-funded federal healthcare system and the millions of enrollees who rely on its programs.”
Christopher M. Silvestro from DCIS added: “Investigating false claims against TRICARE, the healthcare system for military members and their families, is a top priority for the Defense Criminal Investigative Service, the criminal investigative arm of the Department of Defense’s Office of Inspector General. This announcement underscores our commitment to working with our law enforcement partners and the Department of Justice to protect TRICARE against unwarranted and fraudulent expenses.”
Derek M. Holt from OPM-OIG commented: “Knowingly submitting claims for medically unnecessary insulin refills exploits benefits that federal employees rely on to manage their health, increasing the cost of care and wasting taxpayer dollars. We thank our agents, law enforcement partners, and the Department of Justice for their dedication to investigating and pursuing these improper billing practices that undermine the Federal Employees Health Benefits Program.”
The case revealed that many CVS pharmacies did not break open cartons containing five insulin pens when dispensing medication during much of this period—sometimes providing more than what was allowed or needed based on patient prescriptions or insurance limits.
When pharmacy staff reported lower days-of-supply than actually dispensed or relied on automated systems using inaccurate data points about prescription usage rates (“days-of-supply”), it sometimes led customers enrolled in auto-refill programs receiving notifications—and subsequent medication—earlier than necessary.
Private whistleblower lawsuits under seal were joined by federal authorities as part of this action.
Jay Clayton commended investigators from multiple agencies involved in examining these practices.
Assistant U.S. Attorney Pierre Armand is leading this case within his office’s Civil Frauds Unit.
