Alert pharmacist whistleblower awarded $9.3 million in $59 million Kmart Medicare fraud suit settlement


pharmacist-300x200A sharp eyed pharmacist James Garbe has been awarded $9.3 million as his reward for revealing Medicare D and Tricare  overbilling by Kmart. Mr. Garbe noticed that his own prescription was filled a a non-Kmart competitor pharmacy which charged Medicare less than Kmart did. His subsequent review of Kmart’s reimbursement claims unveiled a two-tiered pricing system, one for customers who paid cash and higher amounts for those with insurance including Medicare. The effect was that Medicare was routinely overbilled. For example, in one case, Kmart reportedly sold a 30-day supply of a generic version of a prescription drug for $5 to cash customers. Then it filed for reimbursement from the government for $152 for that same drug for its Medicare customers. Garbe filed his whistleblower suit in 2012.

The False Claims Act (FCA) makes it illegal for a person or company to make a false filing in any federal health care program. The law allows individuals who reveal fraud to collect a percentage of what the government recovers. Garbe retained a pharmaceutical economist, Dr. Joel Hay, to analyze mountains of reimbursement data. Dr. Hay’s work revealed that Kmart charged nearly all its cash customers “discount program” prices. Garbe also hired an auditor, who testified that, under industry practice and the terms of over 1,000 contracts between Kmart and Medicare Part D Benefit Managers and Plan Sponsors, Kmart should have based its reimbursement requests to the insurance companies handling Medicare Part D on its “discount program” prices. Dr. Hay’s examination revealed that Kmart instead used significantly higher prices when submitting those requests, and was thus reimbursed at a much higher level.

Jeffrey Newman represents whistleblowers but not in this case.