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October 23, 2013 False Claims Act Legal News

Retail Giant K-Mart to Pay Millions for Violations of False Claims Act

In a press release issued by the Federal Bureau of Investigation, it was announced that K-Mart has agreed to pay the United States and 32 participating states $2.55 million to settle allegations of false prescription claims. Under the False Claims Act, which has been ratified or closely mimicked by several state statutes, it is considered unlawful to submit any claim to a government healthcare agency like Medicaid, Medicare or Tricare if that claim contains misrepresentations or fraud. In the case against K-Mart, a courageous pharmacist employee was willing to step forward as a whistleblower and put a stop to its fraudulent billing practices, thereby helping to alleviate higher prescription drug costs for all Americans.


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 Details of the Case Against K-Mart

The case against K-Mart was filed by the federal government as well as the attorneys general of Alabama, California, Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin, Puerto Rico, and the Virgin Islands. In the Complaint, it is alleged that K-Mart routinely billed the government for a full prescription while only dispensing partial prescriptions to patients. This practice allowed K-Mart to recover double or triple full payment for a fraction of one prescription.

Allegations against K-Mart cover January 1, 2004 through October 17, 2005, though it is unclear the true length of time this practice continued. K-Mart was purchased by Sears Holding, Inc. on November 1, 2005.

U.S. Attorney Barbara McQuade applauded the joint efforts of the FBI, Office of Health and Human Services and dozens of state agencies in bringing this type of fraud to light. She specifically stated “[c]ases like this one help ensure that health care program funds are used for the benefit of patients and not instead lost in the bureaucracy of large pharmacies.”


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The whistleblower in this case, Mark Kirsch, worked for K-Mart as a traveling pharmacist. His first-hand knowledge of the fraud helped him come forward as a whistleblower, resulting in an award of $309,687. The whistleblower provisions of the FCA provide individuals an opportunity to receive a portion of the government’s recovery if the whistleblower offered original information about the fraud not generally known to the public. This means the information must not be contained in a public court document, press release or government investigation unless the whistleblower was the original informant.

Qui Tam Plaintiffs Help Keep Costs Down for Everyone

The whistleblower, or qui tam, plaintiff can help keep costs low for all Americans. By coming forward with information relating to fraud or unlawful billing practices, the government can recoup this money and recirculate resources to those who are truly in need. If you believe you have original information about healthcare, tax or government contractor fraud, we encourage you to speak with a whistleblower attorney today.