Kmart Must Pay $32.3 Million in Settlement in Whistleblower Case

Kmart Corp agreed to a settlement of $32.3 billion in a whistleblower lawsuit that alleged its pharmacies were overcharging federal healthcare programs as well as private insurers for generic drugs, announced federal officials late Friday.

The chain of department stores, which Sears Holding Corp. owns, withheld specific information from Medicaid, Medicare Part D, and healthcare insurance provider Tricare that is for members of the military as well as their families, said the Department of Justice.

Pharmacies that do not remain completely transparent in regards to their drug pricing can create overpayments by federal health programs for purchases of prescription drugs, said the acting assistant attorney general Chad Readler of the Civil Division of the federal agency in a prepared statement.

The settlement, added Readler, should put all pharmacies on notice that consequences will be faced if they try to increase payments improperly from health programs that are taxpayer funded through masking the real prices that are charged the general public for the exact same drugs.

This lawsuit stem from 9 years ago and was brought by the whistleblower provision a the federal law known as False Claims Act that made it illegal for an individual or group to make false filings in any healthcare programs of the federal government.

The filing of the complaint was on behalf of former pharmacist at Kmart James Garbe. The suit says that in one particular case, Kmart sold a 30-day supply of one type of generic prescription drug at the price of $5 to clients in its discount program.

However, Kmart then filed to be reimbursed from the government $152 for the same drug for its customers that have Medicare.

Garbe will be given a $9.3 million whistleblower award. The award represents 29% of the recovery of the federal government, said his attorneys. This case was heard in the Southern District of Illinois U.S. District Court.

Garbe’s attorneys from Phillips & Cohen in Washington, D.C., said the victory was a hard fought one for not just their client but for all taxpayers. It is not right for pharmacies to charge healthcare programs in the government more than they charge customers paying cash for the same product, said the attorneys.

A request was made for a comment from Sears Holdings, but the request remained unanswered at the time of this publication.

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