Kmart Agrees to Pay $32.3 million to Settle Whistle Blower’s False Claims Act Suit

PS 3 Indest-2009-2By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

On December 22, 2017, Kmart Corporation agreed to pay $32.3 million to settle a whistle blower lawsuit alleging its pharmacies caused federal health programs to overpay for prescription drugs by not telling the government about discounted prices. The department store chain withheld certain information from Medicare Part D, Medicaid and Tricare, the Department of Justice (DOJ) said.

The Whistle Blower False Claims Act (FCA) Suit.

The new agreement resolves allegations arising from a 2008 lawsuit brought under the qui tam, or whistle blower, provisions of the False Claims Act (FCA). This provision permits private citizens with knowledge of fraud against the government to bring an action on behalf of the United States and to share in any recovery.

The 2008 lawsuit, which was filed by a former Kmart pharmacist, alleged that Kmart pharmacies offered discounted generic drug prices to cash paying customers through various club programs. The pharmacies then knowingly failed to disclose those prices when reporting to federal health programs. According to the suit, in one case, Kmart had sold a 30-day supply of a generic version of a prescription drug for $5 to customers of its discount program, but then filed for reimbursement from the government for $152 for that same drug for its Medicare customers.
To read more on the 2008 suit, click here.

The settlement agreement with the United States is a part of a global $59 million settlement that includes a resolution of state Medicaid and insurance claims against Kmart. The former pharmacist will receive a whistle blower award of $9.3 million. The case was heard in the U.S. District Court in the Southern District of Illinois.

To read the DOJ’s press release on this case in full, click here.

To read about a similar case of a pharmacy inflating prices to government health care programs, click here to read one of my prior blogs.

Who Knew Medicare Part D Claims Could Yield Such Big Whistle Blower Settlements?

Who knew Medicare part D claims could yield such big whistle blower settlements? I know I didn’t. I didn’t even think about such claims until I read this case. This could mean some serious compliance issues for big chain stores that have pharmacies (note that I said “could”). Walmart, Publix, Albertsons, Costco, Sam’s Club, Winn Dixie, Engel’s, and every other chain that owns and operates pharmacies, may be in jeopardy.

Contact an Experienced Health Law Attorney to Assist in Whistleblower/Qui Tam Cases.

If you have knowledge of false claims being filed against Medicare, Medicaid, TRICARE/CHAMPUS or any other type of government program, please contact us, and we will be happy to assist you. Our law firm represents health professionals and health care organizations almost exclusively. Yet, we have been involved in a number of whistleblower/qui tam cases, in which we represent the person who files the claim (the whistle blower). We have also defended health professionals and institutions in litigation of whistle blower complaints filed against them.

To contact The Health Law Firm, please call (407) 331-6620 or (850) 439-1001 and visit our website at
www.TheHealthLawFirm.com.

Sources:

McCausland, Phil. “Kmart to pay $32.3M to settle health care-related whistleblower case.” NBC News. (December 22, 2017). Web.

The Associated Press. “Kmart to pay $32.3 million to settle prescription drugs case.” ABC News. (December 22, 2017). Web.

About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law. He is the President and Managing Partner of The Health Law Firm, which has a national practice. Its main office is in the Orlando, Florida, area. www.TheHealthLawFirm.com The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone: (407) 331-6620.

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Forest Labs Agree to Pay $38 Million Settlement to End Whistle Blower’s FCA Suit

8 Indest-2008-5By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

On December 15, 2016, Forest Laboratories agreed to pay $38 million to resolve a whistle blower’s False Claims Act (FCA) suit involving allegations that it paid kickbacks to doctors who prescribed three of the company’s drugs, the U.S. Department of Justice (DOJ) announced.

The lawsuit contends that Pharmaceuticals Inc. (Forest), targeted physicians who had a high prescription writing potential and large Medicare and Medicaid patient populations. They also allegedly paid those physicians to attend lavish speaking events where the company had the opportunity to give incentives to health care providers to prescribe their products.

The Settlement.

The new deal settles claims that the New York City-based company and its subsidiary, provided money and meals to certain doctors in connection with programs about the drugs Bystolic, Savella and Namenda. According to the DOJ, the scheme took place between the start of 2008 and the end of 2011. Bystolic is a “beta blocker” that’s often used to treat high blood pressure, Savella is used to treat fibromyalgia and Namenda is used to treat dementia.
“Quality and patient safety must be the driving factors in the medical decision making process,” Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services’ Office of Inspector General, said in a statement. “Attempting to sway physicians to deviate from those core values with illegal inducements, as alleged in this lawsuit, debilitates their unbiased medical judgment at the expense of patients and taxpayers.”

 

The Speaker Programs.

The kickback scheme involved speaker programs in which Forest utilized as ways to persuade doctors to prescribe the three drugs. Forest provided payments and food even when the events were canceled, when no licensed health care professionals attended the programs, when the same people attended multiple programs within a short period of time and when the associated meals cost more than Forest generally allowed, the government said.

“Kickback schemes undermine the integrity of medical decisions and increase the costs of health care for everyone,” Principal Deputy Assistant Attorney General Benjamin C. Mizer said in a statement. “Such schemes are particularly of concern when they are designed to influence drug prescriptions, and the Department of Justice will vigorously pursue companies that subvert the law at the public’s expense.”

Of the $38 million that the government was able to recover, state Medicaid programs will get about $2.5 million and the whistle blower in the case is set to receive almost $8 million.
To read about a similar case of kickback schemes involving pharmaceutical companies, click here to read my prior blog.

Contact Health Law Attorneys Experienced with Qui Tam or Whistle blower Cases.

Attorneys with The Health Law Firm also represent health care professionals and health facilities in qui tam or whistle blower cases both in defending such claims and in bringing such claims. We have developed relationships with recognized experts in health care accounting, health care financing, utilization review, medical review, filling, coding, and other services that assist us in such matters. We have represented doctors, nurses and others as relators in bringing qui tam or whistleblower cases, as well.

To contact The Health Law Firm, please call (407) 331-6620 or (850) 439-1001 and visit our website at www.TheHealthLawFirm.com.

Sources:

Kennedy, John. “$38M FCA Payout Ends Kickback Suit Against Forest Labs.” Law360. (December 15, 2016). Web.

Tycko & Zavareei LLP. “Forest Laboratories and Forest Pharmaceuticals Inc. Settle Lawsuit Alleging Companies Engaged in Physician Kickback Scheme; Agree to Pay $38 Million.” The National Law Review. (December 19, 2016). Web.

About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law. He is the President and Managing Partner of The Health Law Firm, which has a national practice. Its main office is in the Orlando, Florida area. www.TheHealthLawFirm.com The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone: (407) 331-6620.

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“The Health Law Firm” is a registered fictitious business name of and a registered service mark of The Health Law Firm, P.A., a Florida professional service corporation, since 1999.
Copyright © 2016 The Health Law Firm. All rights reserved.