CVS Health’s pharmacy benefit manager, CVS Caremark, has been ordered to pay $289.9 million in damages and penalties after a federal judge found the company guilty of defrauding Medicare in a scheme that cost taxpayers approximately $95 million.
On August 19, 2025, Judge Mitchell Goldberg of Pennsylvania’s Eastern District Court imposed the massive penalty, tripling the original $95 million in damages under the False Claims Act and adding a $4.9 million civil fine. The ruling stems from fraudulent activities that occurred between 2013 and 2014, when Caremark manipulated how drug costs were reported to Medicare.
The case centered on Caremark’s role as a pharmacy benefits manager, where it intentionally misrepresented how much Medicare beneficiaries paid for prescriptions at major pharmacy chains Rite Aid and Walgreens. According to court findings, Caremark caused two subsidiaries to submit false direct and indirect remuneration reports, leading Medicare Part D to be overbilled by $95 million.
Judge Goldberg emphasized that the fraud was “financially motivated” and not the result of innocent mistakes, noting that Caremark repeatedly concealed the true nature of its pharmacy contracts when given opportunities to explain. The scheme allowed Caremark to earn hidden profits while causing the Centers for Medicare and Medicaid Services to over-subsidize prescription drug costs.
The fraud was exposed by Sarah Behnke, a former head actuary for Medicare Part D at Aetna, who brought the whistleblower lawsuit under the False Claims Act. Behnke, who worked for Aetna before CVS acquired the company in 2018, accused Caremark of causing health insurers to submit inflated claims to Medicare since 2010.
CVS attempted to minimize the penalty, arguing it should pay less because the fraud involved only two pharmacy chains over two years. However, Judge Goldberg rejected this argument, stating that “Caremark should not pay less because it only committed fraud with respect to two of the largest pharmacy chains in the country”.
CVS Health has announced plans to appeal the ruling, expressing disappointment with the court’s decision while noting satisfaction with some aspects of the June liability ruling.
This penalty represents the second major legal blow to CVS in recent months, following a separate $949 million fine imposed in July for fraudulent billing by its Omnicare division