Kmart whistleblower awarded $9 million for prescription drug overcharges

By Rochard L. Cassin, The FCPA Blog

A pharmacist at a Kmart in Ohio was awarded $9.3 million for his lawsuit that alleged Kmart was overcharging government-sponsored insurance programs.

James Garbe worked at a Kmart pharmacy in Defiance, Ohio. He filed his whistleblower lawsuit in 2008.

He alleged that Kmart offered discounted prices to customers who paid in cash through club programs but didn't report those discounts to federal health programs such as Medicare Part D and Medicaid.

Kmart Corp. agreed last week to pay $32.3 million to settle the federal allegations. The company also paid about $10 million to resolve state claims.

Garbe litigated the case alone after the government declined to intervene in his lawsuit.

The federal False Claims Act permits private parties to sue on behalf of the government in qui tam actions and share in any recovery.

The FCA requires the government to decide whether it will join a qui tam case. When the government doesn't intervene, whistleblowers can litigate on their own to recover funds for the government.

According to Garbe's complaint, in one case Kmart sold a 30-day supply of a generic prescription drug for $5 to customers of its discount program but filed for reimbursement from the government for $152 for the same drug for Medicare customers.

Kmart is part of Sears Holdings Corp., based in Hoffman Estates, Illinois.

Garbe's lawyers at Phillips & Cohen said their client discovered the overcharging practices when he filled a personal prescription at the Kmart pharmacy where he worked in Ohio.

Kmart claimed to his Medicare Part D insurer that the prescription cost $60 rather than the $15 that it charged cash-paying customers in its discount program, the lawyers said.

The lawsuit was U.S. ex rel. Garbe v. Kmart Corp., Case No. 12-CV-881-NJR-PMF (S.D. Ill.).