A $32.3 million settlement has been reached between Kmart Corporation and the United States government, bringing an end to allegations that “in-store pharmacies in Kmart stores failed to report discounted prescription drug prices to Medicare Part D, Medicaid, and TRICARE, the health program for uniformed service members and their families.” The lawsuit itself was filed against Kmart Corporation, a “wholly owned subsidiary of Sears Holdings Corporation (SHC),” back in 2008.
A $32.3 million settlement has been reached between Kmart Corporation and the United States government, bringing an end to allegations that “in-store pharmacies in Kmart stores failed to report discounted prescription drug prices to Medicare Part D, Medicaid, and TRICARE, the health program for uniformed service members and their families.” The lawsuit itself was filed against Kmart Corporation, a “wholly owned subsidiary of Sears Holdings Corporation (SHC),” back in 2008.
For those who don’t know, the lawsuit brought many allegations against Kmart Corporation that stemmed from the “qui tam, or whistleblower, provisions of the False Claims Act, which permit 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.”
Originally filed by James Garbe “in the federal district in Los Angeles,” the lawsuit alleged that “Kmart pharmacies offered discounted generic drug prices to cash-paying customers through various club programs but knowingly failed to disclose those prices when reporting to federal health programs its usual and customary prices, which are typically used by those programs to establish reimbursement rates.”
In a statement regarding the settlement, Acting Assistant Attorney General Chad A. Readler for the Department’s Civil Division said:
“Pharmacies that are not fully transparent about drug pricing can cause federal health programs to overpay for prescription drugs. 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.”
U.S. Attorney Donald S. Boyce for the Southern District of Illinois also chimed in, saying:
“Pharmacies and other providers who receive funds from taxpayers have a duty to follow the law. 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.”
It’s important to point out, though, that this recent $32.3 million settlement is only part of a larger, more global settlement that totals about $59 million and “includes a resolution of state Medicaid and insurance claims against Kmart.”
So how was the case settled? Who was involved in setting the groundwork for a resolution to this blatant health care fraud? Well, there were a number of players at work behind the scenes, including “the Justice Department’s Civil Division and the U.S. Attorney’s Offices for the Southern District of Illinois and Central District of California.” Additionally, the U.S. Attorney’s Office for the Central District of California and the National Association of Medicaid Fraud Control Units pitched in to help with auditing assistance during the investigation, while the U.S. Department of Health and Human Services and Office of Inspector General pitched in with investigative assistance.
While it’s great that a settlement was reached and the government took an active step towards combating health care fraud, it’s important to note that only allegations were settled by this recent agreement and that “there has been no determination of liability.”
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