CVS Settlement featured in Minnesota Lawyer

May 17, 2011 by  

Our recent False Claims settlement with CVS was covered by Minnesota Lawyer. It is reprinted here with permission:

Medicaid fraud case nets $2.6M award

Friday April 29, 2011
By Barbara L. Jones

The False Claims Act Attorney Group

A team of lawyers including James G. VanderLinden, seated, and Robert P. Christensen, Brian Wojtalewicz and Neil P. Thompson took on Big Pharma and won. (Staff photo: Bill Klotz)

Once again, a team of Minnesota lawyers has taken on Big Pharma and won.

Neil P. Thompson, Robert P. Christensen, Brian Wojtalewicz and James G. VanderLinden recently settled a qui tam case against the pharmacy chain CVS for $17.5 million. The whistleblower/relator, pharmacist Stephani LeFlore of Minnesota, alleged that CVS designed a billing software program that consistently overcharged Medicaid for prescription drugs.

LeFlore and her attorneys will receive $2,595,460 under the state and federal False Claims Acts, and are also entitled to receive attorney fees from CVS. The reward is 16 percent of the settlement, a little bit more than the national average of 15.6 percent. The amount of the attorney fee is still under negotiation.

The four lawyers also sued Walgreens in 2005 for using a billing system that cheated Medicaid. That case settled in 2008 for $9.9 million with the whistleblowers – Thompson, who is a pharmacist as well as a lawyer, and another man – receiving $1.44 million plus fees.

In the CVS case, the fraud arose in connection with customers who were on Medicaid and also had private health insurance coverage. In the 10 states involved in the lawsuit – California, Massachusetts, Michigan, Minnesota, Florida, Indiana, Alabama, Nevada, New Hampshire and Rhode Island – CVS was supposed to charge the insurance companies a certain amount for prescriptions, with a limited co-pay charged to the customers. This limited co-pay was assigned to Medicaid.

But LeFlore, who is a pharmacist at CVS, alleged that CVS consistently overcharged Medicaid for the co-pays. She claimed that overcharges occurred on hundreds of thousands of prescription sales for over five years. To support her claims, she first gathered data from CVS’s computers, Christensen said.

LeFlore was told by her attorneys to look to see how much CVS had billed Medicaid, and then contact the state and the insurance companies to see how much CVS was entitled to.

Because the same attorneys had handled the Walgreens case, it was easier to know what to look for, Thompson said.

“She … had a tip as to what to look for, because of the previous cases,” he noted.

Once LeFlore had collected the information, she and her attorneys could run the numbers and see a pattern, Wojtalewicz said.

Before filing their case, LeFlore’s attorneys wanted to make sure they were bringing good information to the table.


“We wanted to have some of the juice before we got to the government to build up our credibility, to prove our case,” Christensen said. “Not only do we have to sell it to ourselves, we have to sell it to the government lawyers and then it has to get sold to the defendant.”

Typically, a relator files a complaint under seal. This allows the government, if it decides to intervene, to investigate though its own channels before informing the object of the investigation. If the investigation reveals a basis for going forward, a judge partially lifts the seal and advises the defendant of the case. Then the parties may negotiate a settlement, keeping in mind that the law allows for treble damages and a penalty of $5,500 to $11,000 for each claim falsely filed, VanderLinden said.

As the case develops, the relator’s attorneys may find themselves in conflict with the government over their share.

“We often end up negotiating with the government,” Wojtalewicz said.

He said that many private lawyers who work with qui tam cases become frustrated because the federal attorneys are “smothered” in False Claim Act matters. “We think they cherry-pick. They take the biggest and most easily proven, and you can’t blame them.”

In this case, the government almost backed away because they didn’t think there were enough damages to make it worth pursing. But LeFlore’s lawyers persisted and the government eventually came around.

Qui tam cases are frustrating for the relator, noted Thompson, because he or she is generally still employed by the defendant.

“One of the important take-aways for lawyers … is to emphasize that the whistleblower should get advice early before he or she reports inside the company,” Wojtalewicz said. Otherwise, “you’re painting a big target on your back.”

Venue is an important issue in qui tam cases. In the LeFlore case, one of the first strategic decisions the team made was to sue in federal court in Wisconsin, which is in the Seventh Circuit. “Eighth Circuit opinions on false claims really are oriented to the corporations, not the whistleblower,” Wojtalewicz explained.

Stephani LeFlore, as Relator for the United States v. CVS Pharmacy, Inc.

May 14, 2011 by  

CVS pays $17.5 Million to settle Medicaid Fraud

CVS, the giant retail pharmacy chain, has agreed to pay $17.5 Million to settle a whistleblower lawsuit accusing it of Medicaid fraud (“welfare fraud”).


According to her False Claims Acts lawsuit, CVS pharmacist Stephani LeFlore of Minnesota brought evidence to the government that CVS used a billing system for years that was designed to overbill Medicaid on prescription charges. Ms. LeFlore is represented by Minnesota attorneys Neil Thompson, Brian Wojtalewicz, Robert Christensen, and James VanderLinden, with local counsel Aaron Halstead of Madison, Wisconsin, where the case was filed in federal court.

It was done in relation to dual-eligible customers – those legitimately on Medicaid who also maintained their private health insurance coverage. The insurance coverages required CVS to charge the insurance company a smaller amount for prescriptions, and limited co-pay from the customer. When a person is allowed Medicaid coverage, the government always obtains an assignment of the person’s rights under their private health insurance coverage. The government essentially takes over the citizen’s rights under the coverage. This includes the common right to pay a smaller co-pay amount on prescriptions.

Ms. LeFlore claimed in her federal and state lawsuits that CVS should only have billed the Medicaid program the same limited co-pay on prescriptions that it would have normally billed the customer under the insurance plan. She alleged that CVS designed a billing software program for its pharmacies that consistently overcharged Medicaid on these co-pays. She claimed that these overcharges occurred on hundreds of thousands of prescription sales for well over five years.

The $17.5 Million settlement covers over-billings by CVS in the states of Minnesota, California, Massachusetts, Michigan, Florida, Indiana, Alabama, Nevada, New Hampshire and Rhode Island.

Ms. LeFlore first complained internally, but she was told by a supervisor that “corporate took care of the billing” and that she need not be concerned. She then retained her attorneys and commenced the False Claims Acts (qui tam) lawsuit in September, 2008. The lawsuit stayed under seal (non-public), according to the False Claims Acts and court orders, until the announcement of this settlement.

Ms. LeFlore and her attorneys will receive $2,595,460.00 as the reward under the federal and state False Claims Acts. They are also entitled to receive attorney fees from CVS.


Only CVS had the information necessary to reveal the correct, legal price established by the contracts of CVS with the insurance companies or related pharmacy benefit manager companies (PBMs). The states’ Medicaid agencies did not have this information. The Medicaid program is jointly financed by the Federal and State governments. It is administered by an agency in each state. Some state Medicaid agencies were aware of this wrongful billing potential, and directly addressed it in their rule making. Other states, particularly those states not included in the settlement, have missed the overbilling and are still paying it.


The government team on the investigation, negotiations and settlement was led by Leslie Herje, Assistant United States Attorney in Madison, Wisconsin, and Allie Pang, Trial Attorney in the Department of Justice, Civil Division, in Washington, D.C., with assistance from Nancy Mahoney, Assistant Attorney General in Massachusetts, and Elizabeth Valentine, Assistant Attorney General in Michigan.

Special Agents Jennifer Bowers and Gary Nelson of the federal Health and Human Services Office of Inspector General, and Joni Connell and Tom Gomach of the U.S. Attorney office in Madison, Wisconsin, provided good assistance to the lawyers for the government in the investigation.


CVS, the nation’s largest retail pharmacy giant, operates with over 7,100 stores across America.


The original federal False Claims Act was made law by Abraham Lincoln and the Civil War Congress, to enlist citizen whistleblowers in the fight against fraudulent war industry profiteers. It empowers citizens by giving them a reward, and substantial legal rights against retaliation by employers. In its present form, the government and whistleblowers can recover up to three times the amount of the fraud, plus substantial penalties and attorney fees. Whistleblowers (who are called “relators” under the law) may recover from 15% to 30% of the amounts collected from the frauding corporation. At least 29 states have passed their own similar false claims acts, and many other states are in the process. The government has recovered over $5.5 Billion against frauding corporations just since 2009. Medicaid and Medicare fraud, along with military contracting fraud, are the largest areas for recoveries, but ethical citizens have exposed fraud in the education, environmental and transportation fields, and in other areas of federal and state spending. The new state laws will help honest citizen whistleblowers and the government bring corporations cheating state taxpayers to account. More citizens are also using the newer IRS whistleblower reward law to bring tax cheating corporations to justice.


Ms. LeFlore’s attorneys Neil Thompson, Brian Wojtalewicz, Robert Christensen, and James VanderLinden have years of experience confidentially advising and representing citizen whistleblowers in false claims act cases.

Their website is


Neil P. Thompson

Law Offices of Neil P. Thompson

2249 East 38th Street

Minneapolis, MN 55407-3083



Brian Wojtalewicz

Wojtalewicz Law Firm, Ltd.

139 N Miles St.

Appleton, MN 56208



Robert P. Christensen

Robert P. Christensen, PA

670 Park Place East

5775 Wayzata Blvd.

St. Louis Park, MN 55416



James G. VanderLinden

LeVander & VanderLinden, P.A.

5775 Wayzata Blvd.

670 Park Place East

St. Louis Park, MN 55416



Aaron N. Halstead, Esq.

Hawks Quindel, S.C.

222 W. Washington Ave., Suite 450

Madison, Wisconsin 53701-2155

Tel: 608-257-0040



  • Neil P. Thompson

Neil P. Thompson is uniquely qualified to observe and analyze fraud in

the pharmaceutical industry, as a licensed attorney experienced with class

action litigation involving pharmacy pricing and the Federal and State

False Claims Acts, and a licensed pharmacist for 34 years, both as a

pharmacy owner and working for over 130 different chain pharmacy



  • Brian Wojtalewicz

Brian Wojtalewicz is the President-elect of the Minnesota Association for

Justice (formerly the Minnesota Trial Lawyers Association). For over a

decade he has been voted a Super Lawyer by his civil trial attorney peers

in Minnesota.


  • Robert P. Christensen

Robert P. Christensen, P.A. is the Plaintiff/Consumer member of the

International Society of Primerus Law Firms in the State of Minnesota.

He is currently the Dean-Elect of the Academy of Certified Trial Lawyers

of Minnesota and Member of. the American Board of Trial Advocates.


  • James G. VanderLinden

Jim VanderLinden has been an experienced and respected Minnesota trial

lawyer for decades. He is a member and past Dean of the Academy of

Certified Trial Lawyers of MN. He is also a member of the American

Board of Trial Advocates, an international organization of highly qualified

trial lawyers. He has been fighting corporate America for more than 3



  • Aaron Halstead

Aaron Halstead is the past Chair of the Wisconsin State Bar Association’s

labor & employment law section, with over 20 years of success in the

labor and employment law fields. He is also on the Board of Directors of

the Workers’ Rights Center in Madison, Wisconsin.

Senator Grassley Shines Spotlight on Whistleblower Protection in the Pharmaceutical Industry and Seeks Data From Drugmakers on Treatment Of Whistleblowers

July 13, 2010 by  

Great news Whistleblowers! U.S. Senator Charles Grassley, principal sponsor of the 1986 Amendments to the False Claims Act (FCA), co-sponsor of the Whistleblower Protection Act of 1986, and lead sponsor of the Fraud Enforcement and Recovery Act of 2009, and a personal champion of the effort to eradicate Medicare and Medicaid fraud, has brought renewed attention to how the major players in the pharmaceutical industry educate their employees on their rights under the FCA, including the right to be free from retaliation for initiating a false claims lawsuit, and the avenues available for exercising those rights.

Whistleblowers play the central role in ensuring corporate compliance with their ethical and financial obligations to the government and the American public. As false and fraudulent claims in the pharmaceutical industry continue to eat deeper into Medicare and Medicaid funds and threaten to derail health care funding in the U.S., the crucial role of whistleblowers in exposing health care fraud and abuse is receiving renewed attention from Washington. Recent studies indicate that 90% of health care fraud cases are uncovered and prosecuted by whistleblowers, leading to a recovery of over $ 3 billion from false claims lawsuits in the last three years.

Sen.  Grassley, who has long recognized the role of employees in uncovering enormous health care fraud in the pharmaceutical sector, commenced a laudable effort on June the 28th to verify the compliance of 16 major pharmaceutical companies with laws protecting their direct employees and indirect employees (employees of agents and contractors) and other whistleblowers from retaliation for exposing fraud on the government and taxpayers.  Sen. Grassley’s letters to the 16 pharmaceutical companies request updated data on their compliance with the law requiring a written FCA policy and employee training and education on the FCA, including the whistleblower provisions and anti-retaliation protections of the FCA, as well as State civil or criminal laws on exposing health care fraud and protecting the whistleblower.

Sen. Grassley’s efforts are meant to make it easier for individuals with knowledge or evidence of fraud to come forward without risking their career in the process, as well as to ensure that corporate policies have been updated to reflect changes in the law, and truly further the goals of the FCA by educating employees on the FCA and encouraging them to expose health care fraud. According to the senator, “drugmakers have a public responsibility to safeguard the tax dollars that pay for their products,” and to promote “a culture where those who speak up about possible fraud are rewarded rather than retaliated against.”

The 16 pharmaceutical companies targeted by the Senator are:

  • Abb0tt Laboratories
  • AstraZeneca Pharmaceuticals LP
  • Amgen Inc.
  • Boehringer Ingelheim Corporation
  • Bristol-Myers Squibb Company
  • Eisai Corporation of North America
  • Eli Lilly and Company
  • Forest Laboratories, Inc.
  • GlaxoSmithKline
  • Johnson & Johnson
  • Hoffmann-La Roche, Inc.
  • Merck & Co., Inc.
  • Novartis P Corporation
  • Pfizer, Inc.
  • Sanofi-Aventis, and
  • Takeda Pharmaceuticals North America, Inc.

They are expected to respond by the 20th of July with specific information on:

  • Changes or updates to corporate policy on educating employees about the FCA
  • Employee education on the whistleblower anti-retaliation provisions of the FCA, including avenues for filing false claim lawsuits
  • Corporate process for handling employee complaints about possible FCA violations
  • Performance of the corporate FCA compliance program in encouraging employees to come forward with allegations of possible FCA violations
  • Corporate policies to ensure fair treatment of employee complaints of possible FCA violations
  • Any complaints of unfair treatment or retaliation made by whistleblowers
  • Any modification of FCA compliance policy in light of the extension of whistleblower protections to contractors and agents.

If you are seeing fraud on the government, contact us by calling 800-377-1812 for strictly confidential advice from experienced counsel, with no fee obligation.

Relevant Links:

Bloomberg News July 1, 2010 report
Press release from Senator Grassley’s office on the letters

Whistleblowers Rewarded For Revealing Healthcare Fraud

June 18, 2009 by  

One June 3, 2009, The United States Attorney Office, District of Hawaii, announced that Queen’s Medical Center (QMC) of Honolulu has paid $2.5 million to resolve allegations that it overbilled Medicare, Hawaii’s Medicaid, and TRICARE. This marks the settlement of two congruent lawsuits that were filed by two “whistleblowers” that were former pharmacy technicians at QMC.

Under the federal and State of Hawaii False Claims Acts, the government is able to recover up to triple damages, plus penalties, for fraudulent claims made to government programs. Of the $2.5 million QMC has paid, the government received $2 million, of which it shared $400,000 with the whistleblowers. United States Attorney for the District of Hawaii Edward H. Kubo, Jr., praised the two technicians for their courage in coming forward with the case.

As part of the settlement, QMC, the largest private hospital in Hawaii, will maintain a compliance program to ensure its fulfillment of all applicable program rules and requirements for the next five years. The hospital has pledged to continue its efforts to provide high quality health care while complying with health care rules.

In the case, the former technicians alleged that QMC submitted false bills for medications it dispensed and billed federal programs for services the hospital was not eligible to perform. While QMC has agreed to the settlement, it has denied the government’s contentions.

If you are witnessing fraud on the government, contact us by calling 800-377-1812 for strictly confidential advice from experienced counsel, with no fee obligation.

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