June 25, 2025
The Massachusetts Attorney General’s Office has joined attorneys general from Indiana, Oklahoma, and Connecticut in filing a lawsuit against CVS. The lawsuit alleges that CVS committed pricing fraud and submitted false and fraudulent claims to state Medicaid programs, enriching itself at the expense of taxpayers.
According to a press release, the lawsuit alleges that CVS offered a “cash discount” to customers who used a third-party discount card program. This arrangement enabled CVS to charge state Medicaid programs more than the prices available to the discount card carriers, a violation of usual and customary pricing laws.
According to the lawsuit:
“This material misrepresentation by CVS caused the Intervening States’ Medicaid Programs to reimburse CVS at higher prices than CVS was entitled under the Intervening States’ regulations”.
Usual and customary pricing (“U&C”), commonly used in insurance settings, refers to the typical amount a healthcare provider charges for a good or service. This pricing standard helps ensure that insurers do not reimburse more than what is generally charged to the public. This means that if a manufacturer sells a drug at a lower price to a private insurer, consumer, or hospital, the state program is entitled to that same lower price.
U&C pricing is intended to protect consumers from being overcharged by healthcare providers. In the context of this case, it serves to safeguard taxpayers by preventing corporations from inflating charges to vital publicly funded state and federal programs, such as MassHealth.
By charging some customers less than MassHealth and other state-funded Medicaid programs, CVS knowingly submitted claims to government programs that exceeded the U&C price offered to the general public.
While CVS is permitted to offer discounts to customers, those discounts must be factored into the U&C pricing submitted to Medicaid. Failing to do so while continuing to accept taxpayer funds at a higher rate constitutes a violation of the False Claims Act in Massachusetts and in the other intervening states.
This lawsuit is part of a broader effort to hold companies accountable for overcharging public healthcare programs. Recently, the U.S. Attorney’s Office in Massachusetts reached a settlement with Walgreens over allegations that it violated usual and customary pricing rules.
Cases like these show the power of the False Claims Act in uncovering and stopping healthcare fraud—and in protecting taxpayer funds.
If you have information about possible health care fraud, please contact us for a free consultation. We have expertise and a desire to help.