The United States Attorney for the Southern District of New York has announced a $37.76 million settlement with CVS Pharmacy, Inc., resolving allegations that the company over-dispensed insulin pens to patients covered by government healthcare programs from 2010 through 2020. The settlement, approved by U.S. District Judge John G. Koeltl, requires CVS to pay $24,446,240 to the United States and the remainder to various states.
According to the government’s complaint, CVS improperly billed Medicare, Medicaid, TRICARE, and the Federal Employees Health Benefits Program by requesting reimbursement for premature refills and dispensing more insulin pens than prescribed. The government also alleges that CVS under-reported the days-of-supply of insulin dispensed to patients.
“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, Special Agent in Charge at HHS-OIG’s New York Regional Office added: “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 commented: “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 stated: “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 complaint details how CVS reported inaccurate days-of-supply when submitting claims for reimbursement after dispensing full cartons containing five insulin pens—the smallest commercially available container—often resulting in exceeding applicable limits set by pharmacy benefit managers (PBMs). Instead of obtaining overrides or documenting actual supply dispensed as required by some PBMs’ policies, many CVS pharmacies simply reported maximum allowable amounts under insurance plans.
This reporting practice sometimes led auto-refill systems at CVS stores to notify customers about prescription availability before they actually needed new supplies according to medical directions. As a result, some beneficiaries accumulated large amounts of unused insulin.
CVS management was aware that over-dispensing was occurring due in part to audit findings from PBMs that identified repeated violations such as premature refills or reporting invalid supply data; however, necessary corrective actions were not taken during this period.
As part of its agreement with authorities—including joining five private whistleblower lawsuits filed under seal—CVS admitted responsibility for certain conduct described in these allegations.
The investigation involved multiple agencies including HHS-OIG, DOD-OIG, OPM-OIG, Department of Veterans Affairs OIG, and U.S. Postal Service OIG. Assistant U.S. Attorney Pierre Armand led the case within the Civil Frauds Unit.
