CVS Health Sued for Allegedly Withholding Funds From Hospitals

Several U.S. hospital systems are suing CVS Health and its pharmacy companies, alleging they improperly withheld funds generated under the 340B Drug Pricing Program. Healthcare law firm Frier & Levitt LLC announced the May 18 filing of three lawsuits against CVS Health Corp., CaremarkPCS Health LLC, Caremark LLC, CVS Specialty Inc. and WellPartner LLC.

The groups filed separate complaints in three federal district courts. The University of Kansas Hospital Authority filed in U.S. District Court for the District of Kansas. Mount Sinai Hospital, St. Luke’s-Roosevelt Hospital and Mount Sinai Beth Israel filed in the Southern District of New York. The University of Michigan Hospitals and Health Centers and Edward W. Sparrow Hospital Association filed in the Eastern District of Michigan.

“We do not comment on matters that are subject to ongoing litigation and remain focused on serving our customers and executing our business priorities,” a CVS Health spokesperson said in an email to PLANSPONSOR’s sister publication PLANADVISER.

The plaintiffs accuse CVS and the affiliated companies of fraud, breach of contract, and of civil violations of the federal Racketeer Influenced and Corrupt Organizations Act, among other claims. They seek jury trials and access to the CVS accounting records “to determine the full extent and amount of Plaintiffs’ damages and losses resulting from the violations and breaches.”

The hospitals each allege CVS Health and their integrated pharmacy businesses orchestrated a scheme to divert and retain $250 million of savings intended for safety-net providers, according to the complaints.

CVS and its affiliates, according to Frier Levitt’s plaintiffs, retained a portion of payments tied to certain specialty drug claims processed under the 340B program, rather than passing the full reimbursement through to the hospitals as required under their contracts. The complaints allege CVS kept the difference—also known as the “spread”—as profit between 2020 and 2025.

The 340B Drug Pricing Program was established by Congress in 1992 to enable hospitals and health centers serving low-income and underserved populations to purchase outpatient drugs at discounted prices. Providers can use the savings to expand care, including funding uncompensated services and patient assistance programs.

The hospitals allege that because 340B eligibility is often determined after the time of sale, claims were initially reimbursed at standard rates. They state that CVS later adjusted those claims to lower reimbursement amounts once claims were flagged as 340B-eligible and reported those reduced figures to the hospitals, while retaining the difference.

“The hospitals are seeking full accountability and recovery of the funds that should have gone to expanding access to care for underserved communities,” said Jonathan Levitt, a founding partner in New York-based Frier Levitt, in a statement.