Kmart to Pay $32M in Whistleblower Settlement Over Alleged Drug Overcharges

2018 Life, Health and Annuity Planner

How to Lean Against the Biases in 2018

3 New Substance Use Confidentiality Rule Facts

Kmart Corp. has agreed to pay $32.3 million to the United States to settle allegations that in-store pharmacies overcharged several federal health care programs, the U.S. Department of Justice has announced.

The settlement agreement is part of a larger $59 million settlement that includes a resolution of state Medicaid and insurance claims against Kmart, the DOJ said.

According to the Justice Department, Kmart, a wholly owned subsidiary of Hoffman Estates, Illinois-based Sears Holdings Corp., allegedly violated the False Claims Act by offering discounted generic drug prices to cash-paying customers, but didn’t disclose those cheaper prices when reporting the drugs’ usual and customary prices to Medicare Part D, Medicaid and Tricare, which is the health program for uniformed service members and their families.

(Related: Judge Blasts Justice Dept. for a ‘House of Cards’ False Claims Case)

A representative for Sears Holdings did not immediately respond to an emailed request for comment Tuesday afternoon. The claims resolved by the settlement were allegations only, and there was no determination of liability, according to the Justice Department.

The July 2008 False Claims Act lawsuit was filed by whistleblower James Garbe, a long-time pharmacist who, at the time of filing, had worked in the Kmart store in Defiance, Ohio, since May 2007, according to court documents. Garbe will receive $9.3 million for his share of the recovery. The lawsuit initially was filed in the Central District of California before being transferred to the Southern District of Illinois.

The plaintiff, and later his court-appointed guardian, were represented by Erika Kelton and Larry Zoglin of prominent qui tam law firm Phillips & Cohen, as well as Garrett Broshuis, Christopher Hoffman, Robert King, Peter Rocque, Stephen Tillery and George Zelcs of St. Louis-based Korein Tillery.

“Pharmacies that are not fully transparent about drug pricing can cause federal health programs to overpay for prescription drugs,” Chad Readler, acting assistant attorney general for the DOJ’s Civil Division, said in a statement. “This settlement should put pharmacies on notice that there will be consequences if they attempt to improperly increase payments from taxpayer-funded health programs by masking the true prices that they charge the general public for the same drugs.”

The lawsuit is captioned United States ex rel. Garbe v. Kmart.

—Read SEC Whistleblower Chief: ‘Be Careful What You Wish For’ on ThinkAdvisor.

— Connect with ThinkAdvisor Life/Health on Facebook and Twitter.

Originally published on Corporate Counsel. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Rewards, when structured the wrong way, can hijack potential informants’ moral motivation to do the right thing, a study finds.

You are signed up!

A survey of advisors nationwide reveals how the use of ETFs is expanding and what factors are likely to further support this trend. width:300px!important;max-height:36px; ThinkAdvisor TechCenter

ThinkAdvisor’s TechCenter is an educational resource designed to give you a competitive edge by keeping you abreast of new tech innovations and need-to-know information that can be applied to your business. padding: 0px 81px;width: inherit; Retirement Wire Retirement Wire

Your resource for news, research and analysis to help you deliver more effective outcomes to your clients. Resources Safely increasing your sales with IULS

Finding the best IUL for your practice.

Learn how to pivot your tactics and sell better to ultimately grow your business.

Help your clients secure their loved ones’ future with this useful worksheet.

Join this webcast to see how Trisha Qualy, Director of Wealth Management at AdvisorNet Financial, took client assets from $100 million to $1.3 billion in…

Join this complimentary webcast to learn innovative strategies that have proven effective in containing rising health costs.

Join this conversation as a panel of experts provides tips and best practices to optimize your tech resources for business growth.

Leave a Reply

Your email address will not be published. Required fields are marked *