Oklahoma’s lawsuits against CVS over Medicaid and related pharmacy billing have produced a string of settlements since 2022, the largest being a $32.1 million agreement in September 2025 over withheld drug rebates owed to the state employee health plan. Oklahoma has also joined a multi-state Medicaid whistleblower case accusing CVS pharmacies of overbilling Medicaid by hiding lower cash-discount prices, signed on to a $36.5 million multi-state insulin overbilling settlement, and separately recovered $5 million for pharmacies reimbursed below cost. Together the actions form a running enforcement campaign by Attorney General Gentner Drummond against CVS Health and its pharmacy benefit manager subsidiary, CVS Caremark.
The $32.1 Million HealthChoice Rebate Settlement
Drummond announced the HealthChoice settlement on September 9, 2025. The state alleged that CVS Caremark was contractually required to pass drug manufacturer discounts and rebates through to HealthChoice, the plan covering state employees, retirees, and their families, but instead kept those funds between January 2020 and December 2024.1Oklahoma Voice. CVS Caremark Agrees to $32M Settlement Involving Oklahoma Employee Health Plan, AG Says
After outside counsel fees, roughly $27 million went to HealthChoice, intended to help hold down premiums for members. Going forward, CVS Caremark must pay any additional rebate amounts identified for the 2020–2024 period within 90 days, pass through future rebate payments within 90 days of collection, and report all collected rebates quarterly under a broader definition of “rebate.”2Oklahoma.gov. Drummond Secures $32M in Settlement With CVS Caremark CVS Caremark denied wrongdoing and said it settled to avoid the costs of litigation.3News From the States. CVS Caremark Agrees to $32M Settlement Involving Oklahoma Employee Health Plan, AG Says
One point worth flagging: HealthChoice is the state employee plan, not Medicaid. This settlement is often grouped with Oklahoma’s Medicaid-related actions against CVS, but the money returned here belongs to the state employee plan.
The $5 Million Below-Cost Reimbursement Settlement
In January 2025, Drummond filed a complaint in Oklahoma’s PBM Administrative Court alleging that CVS Caremark had repeatedly reimbursed Oklahoma pharmacies less than the actual cost of the medications they dispensed, and had failed to follow the appeals procedures required by state law.4News From the States. Oklahoma Attorney General Files Lawsuit Against CVS Caremark for Below-Cost Reimbursement The initial complaint identified about 200 instances from 15 pharmacies. By the time the case settled in December 2025, it covered 68,099 prescriptions filled between January 2024 and August 2025, with a total settlement of $5,081,520.69.5Oklahoma.gov. Drummond Holds CVS Caremark Accountable With $5M Settlement
Seventy-five percent of the settlement’s fines and costs was designated to go directly to affected pharmacies; the remaining 25 percent funds ongoing PBM oversight by the Attorney General’s office. Eligible pharmacies were to be contacted in writing with payment instructions.6GovDelivery. CVS Caremark Settlement Bulletin CVS Caremark also agreed to review payment disputes against national cost benchmarks, allow pharmacies to submit documentation of their actual acquisition costs, respond to disputes within the ten calendar days required by Oklahoma law, and spend 90 days working with the Attorney General to resolve additional complaints.7Healthcare Finance News. CVS Caremark Settles PBM Allegation for $5 Million The company again denied wrongdoing.8Journal Record. Oklahoma CVS Caremark PBM Settlement
The Multi-State Medicaid Whistleblower Suit
Oklahoma’s most direct Medicaid claim against CVS came in May 2025, when Oklahoma joined attorneys general from Connecticut, Massachusetts, and Indiana in intervening in a whistleblower case originally filed in 2016 in the U.S. District Court for the District of Columbia, United States et al. ex rel. Doe v. CVS Health Corporation et al., No. 1:16-cv-02359.9Connecticut Attorney General. Attorney General Tong Joins Whistleblower Suit Against CVS Pharmacy A coalition that eventually grew to nearly 30 states joined the litigation.10Whistleblower Law Collaborative. 30 States Suit Against CVS Over Medicaid Programs
The states allege that CVS pharmacies systematically overbilled state Medicaid programs by failing to report the lowest prices they offered to the general public. The complaint centers on a discount card program run by ScriptSave: CVS allegedly offered cash-paying customers lower prices through the program while reporting higher amounts to Medicaid as its “usual and customary” price. Under federal and state rules, pharmacies are generally required to bill Medicaid the lowest price they accept from any customer, including those using discount programs.11Healthcare Finance News. CVS Health Overcharged Medicaid Programs, States Complain in Lawsuit
The original whistleblower was a former Target pharmacist whose employer was acquired by CVS in 2015. According to the complaint, Target pharmacies had reported cash discount prices to states as their usual and customary prices before the acquisition, and that practice stopped afterward. The whistleblower alleged the usual and customary price was inflated by more than 100 percent for over 20 drugs, with two showing exaggerations above 700 percent.10Whistleblower Law Collaborative. 30 States Suit Against CVS Over Medicaid Programs
CVS has disputed the allegations, arguing that the four states leading the suit never issued guidance telling pharmacies that third-party discount card prices constitute a pharmacy’s usual and customary prices. The company said it has “prevailed many times, including by dismissal of the plaintiff’s allegations by the court and by verdicts from juries or final awards by arbitrators” in prior similar cases.11Healthcare Finance News. CVS Health Overcharged Medicaid Programs, States Complain in Lawsuit
The $36.5 Million Multi-State Insulin Settlement
Oklahoma was also part of a bipartisan coalition of 36 attorneys general and the U.S. Department of Justice that reached a $36.5 million settlement with CVS in June 2026 over Medicaid overbilling for insulin prescriptions. Announced by New York Attorney General Letitia James, the settlement resolved allegations that CVS knowingly dispensed more insulin than prescribed, refilled prescriptions prematurely, and falsified data about supply duration and refill compliance from 2010 through 2020.12New York Attorney General. Attorney General James Secures $36.5 Million From CVS for Defrauding Medicaid Of the total, $25.1 million was allocated to participating state Medicaid programs, and the settlement included a permanent injunction.13State AG Report. AG James Multistate Coalition Secures $36.5 Million From CVS in Medicaid Fraud Settlement
The Earlier $4.8 Million Insurance Department Settlement
Before Drummond’s enforcement push, the Oklahoma Insurance Department reached a $4.8 million settlement with CVS Caremark in January 2022 over alleged violations of the Patient’s Right to Pharmacy Choice Act. An investigation begun in September 2020 found that CVS Caremark had improperly collected transaction fees from pharmacies on Medicare Part D and ERISA plan claims. The settlement designated $2.3 million for Oklahoma pharmacies and $2.5 million in penalties.14Oklahoma Insurance Department. OID Settlement With CVS Caremark
Distribution of those funds was made contingent on the outcome of Pharmaceutical Care Management Association v. Mulready, a federal challenge to whether Oklahoma’s Patient’s Right to Pharmacy Choice Act is preempted by federal laws governing Medicare and ERISA plans.15NCPA. CVS Caremark Will Pay $4.8 Million to Oklahoma Over ERISA, Part D Fees
What Oklahoma Cannot Enforce Against ERISA Plans
A federal district court initially upheld Oklahoma’s PBM law, but the Tenth Circuit Court of Appeals reversed on August 15, 2023, ruling that ERISA preempted several key provisions. Those included minimum network access standards, restrictions on using discounts to steer patients to PBM-affiliated pharmacies, the “any willing provider” requirement that PBMs accept any pharmacy meeting their terms, and a prohibition on terminating pharmacies solely because of probation status.16Aimed Alliance. State-Based PBM Reform
On June 30, 2025, the U.S. Supreme Court declined to hear Oklahoma’s appeal, leaving the Tenth Circuit’s ruling in place.17SCOTUSblog. Mulready v. Pharmaceutical Care Management Association Drummond’s office said it remained hopeful for future legal clarity allowing states to regulate PBMs as originally intended.18Journal Record. Supreme Court Declines Review The practical effect is that Oklahoma cannot enforce the preempted provisions against ERISA-governed employer plans, though the state’s PBM regulations still apply to state-regulated insurance markets, Medicaid, and state employee coverage. That distinction is what has kept actions like the HealthChoice rebate case and the below-cost reimbursement case alive even as the broader statute has been narrowed.