December 1, 2025
CVS Pharmacy Inc. will pay $18.2 million to the United States and the State of California to settle claims made under the federal and California state False Claims Acts (FCA). The settlement resolves allegations that CVS knowingly submitted improper reimbursement requests for prescriptions to California’s Medicaid system.
California’s Medicaid program, known as Medi-Cal, is jointly funded by the federal government and the state of California. Medi-Cal provides health care coverage to low-income and/or disabled individuals in California. Medi-Cal has a list of approved drugs called a “formulary.” Some drugs on this list have special rules requiring certain diagnoses and documentation before they can be prescribed. These drugs are called “Code 1” drugs.
Medi-Cal will only pay for Code 1 drugs if they are prescribed for approved medical conditions. This decision is based on factors like safety, effectiveness, risk of misuse, and cost. Pharmacies, such as CVS, are responsible for checking and confirming that these drugs are prescribed for the correct conditions. If a doctor prescribes a Code 1 drug for a condition that isn’t approved, CVS can still request payment. However, it must provide justification for the payment to the Department of Health Care Services (DHCS).
In 2019, a pharmacist employed by CVS Pharmacy in California, filed a whistleblower complaint under the qui tam provisions of the federal False Claims Act, as well as under several states’ False Claims Acts. The qui tam provisions permit private individuals, known as relators, to bring actions on behalf of the government to recoup damages caused by fraud. In the case of a successful false claims act case, the relator shares in any recovery by the government.
The whistleblower in this case alleged that CVS did not properly confirm or document the required diagnoses for Code 1 drugs. In some cases, CVS even dispensed drugs for unapproved conditions then knowingly billed Medi-Cal for those prescriptions. CVS has agreed to pay $18.2 million to settle those allegations. The whistleblower will receive approximately $3.3 million as their reward.
Whistleblower Law Collaborative LLC devotes its practice entirely to representing clients nationwide in bringing whistleblower actions. Our clients bring actions under the federal and state false claims acts, and other whistleblower programs including those addressing health care fraud. If you are considering becoming a health care fraud whistleblower or are aware of other types of fraud, contact us for a free, confidential consultation.