K-Mart pays $59 million to settle pharmacy fraud allegations

by Ben Vernia | December 27th, 2017

On December 22, the Department of Justice announced that K-Mart Corp. has agreed to settle a whistleblower’s fraud allegations concerning its pharmacy services for $32.3 million. According to DOJ’s press release:

Kmart Corporation, a wholly owned subsidiary of Sears Holdings Corporation (SHC), has agreed to pay $32.3 million to the United States to settle 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 Justice Department announced today.

The agreement resolves allegations arising from a lawsuit brought under 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.  The 2008 lawsuit, which was filed by James Garbe in the federal district in Los Angeles and later transferred to the Southern District of Illinois, 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.

*   *   *

DOJ announced that the whistleblower, who litigated the case after the government declined to intervene in it, will receive $9.3 million of the global $59 million settlement (a relator’s share of 15.7%).

Leave a Reply

Recent Posts

Recent Comments