K-Mart to Settle Drug Overcharge Whistleblower Case for $32 Million

K-Mart Corp. agreed to pay $32.3 million to the federal government to settle lawsuit in which it was alleged that K-Mart’s pharmacies overcharged federal healthcare programs.

The Department of Justice announced the settlement agreement, which was part of a larger $59 million settlement that included resolution of insurance and Medicaid claims against the retail corporation.

According to information from the Justice Department, K-Mart allegedly violated the False Claims Act by providing customers with discounted, generic drug prices so long as they paid in cash. However, the corporation did not disclose its offering of these cheaper prices when reporting the typical prices under Medicare Part D, Medicaid and Tricare (the health program for service members of the armed forces and their families).

Recovery in the case

This particular case dates back to July 2008, when whistleblower James Garbe initially filed the suit under the False Claims Act. Garbe worked for years as a pharmacist, and specifically with K-Mart in Defiance, Indiana since May 2007.

For his role in bringing about a successful enforcement action, Garbe will receive $9.3 million, demonstrating once again the benefit that exists to whistleblowers who bring claims under the False Claims Act on behalf of the federal government.

A representative for Sears Holdings, which owns K-Mart, did not issue immediate comments. According to the Justice Department, Sears Holdings did not have to admit any liability in the case.

For more information and advice on how to bring forth a False Claims Act lawsuit, contact an experienced Dallas attorney at Whistleblower Law for Managers.