Kmart pays $1.4 million Medicare settlement

Hoffman Estates, Ill. – Kmart has paid the U.S. government $1.4 million to resolve allegations that it improperly used drug manufacturer coupons and gasoline discounts to reduce pharmacy costs for Medicare patients at Kmart pharmacies.



The settlement resolves allegations that Kmart violated the False Claims Act by providing illegal inducements to beneficiaries of the Medicare program. The government alleged that from June 2011 to June 2014, Kmart influenced the decisions of Medicare beneficiaries to bring their prescriptions to its pharmacies by permitting them to use drug manufacturer coupons to reduce or eliminate prescription co-pays.



Federal law prohibits influencing a Medicare patient’s choice of provider with this type of offer. The government alleged that Kmart’s conduct caused the Medicare beneficiaries to seek expensive, brand name drugs instead of cheaper generic drugs, which caused the government’s costs to increase without any medical benefit. The government also alleged that Kmart improperly encouraged Medicare beneficiaries to bring their prescriptions to Kmart pharmacies by offering them discounts on gasoline based on the number of prescriptions that they filled at Kmart pharmacies.



The settlement resolves allegations in a lawsuit filed by Joshua Leighr, a former Kmart pharmacist, who will receive approximately $248,500 of the settlement. Kmart is not accepting any liability as part of the settlement.