BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley announced Tuesday that a California company will pay $2.6 million to the Massachusetts Medicaid Program to resolve allegations of improper denial of pharmacy claims.

Caremark LLC, a company operated by CVS Caremark Corp., will pay a total of $4.25 million as part of a settlement with Massachusetts, Louisiana, Delaware, California, Arkansas and the Department of Justice. MassHealth will receive $2.6 million to resolve claims that Caremark failed to reimburse MassHealth for pharmacy claims paid on behalf of its subscribers.

"This settlement is the result of an investigation into allegations that Caremark failed to properly handle and reimburse pharmacy claims for certain customers in the commonwealth, leaving MassHealth to foot the bill," Coakley said. "Our office will continue to safeguard the taxpayers' investment in programs designed to provide care and treatment to our most vulnerable citizens."

Caremark operates as a pharmacy benefit manager, processing and paying prescription drug claims. Caremark allegedly engaged in the improper rejection, denial or reduction of pharmacy reimbursements. The company allegedly denied payment of claims for failure to obtain prior authorization, rejected claims that were not filled at an in-network pharmacy, rejected claims for reimbursement by the state Medicaid programs as not timely and processed reimbursements as paper claims so they would be rejected when the client's plan did not include a paper claim benefit.

The inquiry into Caremark began in 1999 when a whistleblower lawsuit was filed in the U.S. District Court in San Antonio.


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