Kmart Corp. has agreed to settle a health care fraud lawsuit that alleged the big-box retailer overcharged state and federal health care programs for prescription medications. The case came to light after a pharmacist noted discrepancies in what the pharmacy chain charged Medicare, Medicaid, and Tricare for generic drugs. For his involvement in coming forward with the lawsuit, the pharmacist will receive $9.3 million of the settlement. That is 29 percent of the $32.3 million overall, according to NBC News.
The lawsuit was filed under the “qui tam” provision of the False Claims Act. As we have discussed, federal law allows private citizens to initiate a lawsuit on behalf of the government when there is evidence of fraud in government contracts. The health care industry, in all of its wide-ranging aspects including pharmaceutical services, continues to face a large number of federal whistleblower claims. These lawsuits allow the government to recover taxpayer money obtained through fraudulent billing practices.
Lawsuit Alleged The Pharmacy Charged The Government More Than Cash-Paying Customers
As an example of how the lawsuit alleged that Kmart used unfair billing practices to generate higher government reimbursement, the lawsuit claimed that customers participating in a discount program were charged only $5 for a month-supply of a prescription medication. The pharmacy chain allegedly charged Medicare $152 for the same medication. Federal law requires pharmacies to bill government insurance programs the lowest price for medications that they charge cash-paying customers.
The story highlights that nearly anyone in the health care industry may come across evidence of Medicare or Medicaid fraud. Claims are often filed by people working in the trenches. Some people may believe that it takes a high-level manager or official in an organization to have visibility to fraudulent billing practices. Health care workers, billing clerks, pharmacists and others who suspect fraud may be occurring related to government medical insurance programs might want to speak with a skilled attorney who is experienced in whistleblower lawsuits.
Sears Holdings Corp., the parent company of Kmart Corp., has not made a public statement concerning the settlement.