Caremark Rx

(CMX)

officially faces a formal investigation for alleged Medicaid fraud.

As predicted by

TheStreet.com

in a series of past articles, both federal and state prosecutors have decided to join a whistleblower lawsuit that has been pending against the company for six years.

The government claims that Caremark "engaged in an unlawful scheme over many years" to avoid repaying Medicaid for drugs it should have covered itself. The federal government and four states -- Texas, Tennessee, Florida and Arkansas -- are pursuing the case.

Texas Attorney General Greg Abbott, whose office has taken a tough stand on Medicaid fraud, announced the investigation on Friday.

"We intend to send Caremark a past-due bill for its conduct," Abbott said. "This company schemed to avoid responsibility for its health care obligations to members who were paying premiums. Instead, it opted to let the Medicaid program -- and Texas taxpayers -- cover expenditures it should have covered on behalf of those already insured under its plan. I intend to get those dollars back for Texas."

Medicaid ranks as the largest spender on prescription drugs in the country. But it is also considered the "payer of last resort," meaning that it should cover health care costs only when no other insurance exists.

The government has long complained that pharmacy benefit managers in general have failed to repay Medicaid for drug bills they should have covered themselves. As a result, the government believes it is owed huge sums -- totaling hundreds of millions of dollars annually -- for unpaid Medicaid claims. Under the False Claims Act, the government could charge Caremark up to three times the company's actual portion of that bill.

Caremark did not immediately return a phone call from

TheStreet.com

seeking comment. The company's stock slipped 4 cents to $44.21 ahead of Friday's news.

Earlier in the day,

TheStreet.com

reported that Caremark could soon

pay an industry-high fine to settle a government probe into the business practices of a company it acquired.