CVS Health’s pharmacy benefit manager, Caremark, has been ordered to pay $95 million for overbilling Medicare Part D drug reimbursements, a federal judge ruled Wednesday — a decision that could balloon to $285 million if treble damages are imposed.

The ruling stems from a False Claims Act lawsuit brought by whistleblower Sarah Behnke, a former actuary at Aetna, who accused CVS Caremark Corp. of artificially inflating drug prices submitted to the Centers for Medicare & Medicaid Services (CMS), while paying pharmacies like Rite Aid and Walgreens significantly less.

Overbilling Through Price Padding

In a detailed 105-page opinion, Chief U.S. District Judge Mitchell S. Goldberg concluded that Caremark’s manipulative pricing structures led CMS to “over-subsidize drug costs”, defrauding taxpayers in the process.

"Relator has proven damages with reasonable certainty," Judge Goldberg wrote, emphasizing that Caremark’s conduct resulted in inflated Part D drug prices and distorted CMS reimbursements.

Though the whistleblower initially alleged CVS Pharmacy was also involved, the judge cleared CVS Pharmacy and CVS Health Corp. of liability, finding insufficient evidence to link them to the pricing manipulation.

Damages May Triple Under FCA

While Judge Goldberg didn’t immediately impose treble damages — a standard provision under the False Claims Act — he invited both parties to submit briefs on the issue, meaning Caremark’s liability could climb as high as $285 million.

The federal government chose not to intervene but monitored the case closely. In a summary judgment filing, it emphasized its "strong interest" in ensuring accurate drug cost reporting under the Medicare Part D program.

Aetna Actuary Turned Whistleblower

Behnke first raised concerns internally in 2012–2013, after noticing inconsistent drug pricing between Aetna’s Medicare Part D plans and Caremark’s other clients. Caremark blamed “market conditions”, but Behnke was unconvinced.

An internal review by Crowell & Moring LLP concluded Caremark’s pricing strategy was common industry practice, but Behnke — believing otherwise — filed a qui tam suit in 2014 under the False Claims Act.

She initially estimated damages at $240 million to $330 million.

CVS Responds to Mixed Verdict

CVS reacted with cautious optimism, noting the company was cleared of corporate liability while expressing disappointment in the court’s finding against Caremark.

"We are pleased that the ruling was in our favor as to CVS Pharmacy and CVS Health Corporation’s liability, and disappointed the court found against Caremark on other issues," a CVS spokesperson told Law360.

Behnke’s attorneys did not immediately respond to requests for comment.

Legal Representation

• Sarah Behnke is represented by:

  • Berger Montague PC: David F. Sorensen, Caitlin G. Coslett, Susan Schneider Thomas, Joy P. Clairmont

  • Miller Shah LLP: James C. Shah, Natalie Finkelman Bennett

• CVS Caremark is represented by:

  • Williams & Connolly LLP: Daniel M. Dockery, Craig D. Singer, Enu A. Mainigi, Holly M. Conley