Kmart Agrees to Pay the Government More than $32 million to Resolve Claims that it Overbilled Medicare and Medicaid
As 2017 came to an end we saw the government continue its efforts at pursuing entities and individuals that violate healthcare programs such as Medicaid and Medicare. Even large, multinational corporations were not immune from the long arm of government prosecutors. This was demonstrated when late last month Kmart Corporation agreed to pay $32.3 million to settle allegations that it – through its in-store pharmacies – failed to report discounted drug prices to Medicare Part D, Medicaid and TRICARE beneficiaries and their families. The government says that these activities amount to overbilling for these healthcare programs. Moreover, the government also alleges that Kmart violated the False Claims Act by engaging in such behavior. The settlement resolves allegations that were brought about under the qui tam or whistleblowers provisions of the False Claims Act. Under this provision, private citizens are able to sue on behalf of the United States for False Claims Act violations. Specifically, it is alleged that Kmart’s pharmacies offered discounted generic drug prices to customers who paid with cash then knowingly failed to disclose those discounted prices to Medicare, Medicaid and TRICARE. (TRICARE is a health program designed to assist uniformed service members and their families.)
“Pharmacies and other providers who receive funds from taxpayers have a duty to follow the law,” said U.S. Attorney Donald S. Boyce for the Southern District of Illinois. “If healthcare providers do not provide fair and transparent pricing as required under the law, the False Claims Act allows the government and whistleblowers to ensure that the Medicare, Medicaid, and TRICARE programs are made whole.” The original lawsuit dates back to 2008 and was initiated by James Garber and was later later transferred to the Southern District of Illinois. Garber is expected to receive $9.3 million as his share of the recovery. The settlement agreement is part of a global $59 million settlement against Kmart which includes state Medicaid claims against the corporation.
“Pharmacies that are not fully transparent about drug pricing can cause federal health programs to overpay for prescription drugs.” said Acting Assistant Attorney General Chad A. Readler for the Department’s Civil Division. “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 case is one of the many examples of the government’s emphasis on combating health care fraud. One tool it uses often uses to do this is the False Claims Act.
