Abbott (NYSE:ABT) has agreed to pay $160 million to resolve False Claims Act violation allegations it inherited from Alere, which it acquired in 2017.
The settlement resolves allegations that Alere’s Arriva Medical — a mail-order diabetic testing supply company that ceased operations in December 2017 — paid kickbacks to Medicare beneficiaries, patients who were ineligible to receive meters or patients who were deceased, according to a news release from the U.S. Dept. of Justice.
“Paying illegal inducements to Medicare beneficiaries in the form of free items and routine copayment waivers can result in overutilization and waste taxpayer funds,” Acting Assistant Attorney General Brian M. Boynton for the Justice Department’s Civil Division said in the release. “We will continue to protect the integrity of the Medicare program by pursuing fraudulent claims arising from violations of the Anti-Kickback Statute or other applicable reimbursement requirements.”
The payment marks the latest Abbott legal settlement related to Alere. Last month, the company paid $38.75 million to settle an Alere-related lawsuit in federal court in Newark, N.J., that claimed that from 2008 to 2016, Alere knowingly sold defective INRatio blood coagulation monitors used by people taking anticoagulant drugs, such as warfarin. Blood coagulation monitoring is essential to determine safe dosages.
In the latest suit, the U.S. alleged that, from April 2010 to the end of 2016, Arriva, with Alere’s approval, paid kickbacks to Medicare beneficiaries by providing them “free” or “no cost” glucometers and by routinely waiving or not collecting their copayments for meters and diabetic testing supplies.
The U.S. specifically alleged that Arriva advertised that glucometers would be “free” and then offered Medicare beneficiaries a “no-cost guarantee” under which the company would provide meters at no cost if Medicare denied payment, which typically happened because the beneficiaries were not yet entitled to a new glucometer paid for by Medicare.
Additionally, Arriva also allegedly offered and provided existing customers “free” additional meters to induce them to reorder Arriva’s testing supplies.
On top of those allegations, the DOJ also claimed that Arriva routinely waived and failed to make reasonable efforts to collect Medicare copayments, allegedly failing to sell invoices to beneficiaries while also failing to take other basic steps like issuing collection letters and phone calls.
DOJ said Arriva allegedly systematically waived “small” dollar copayments without informing beneficiaries of their obligations with an invoice, while also waiving copayments when customers complained that Arriva had advertised and otherwise indicated that their supplies would be “free” or at “no cost.”
Other allegations included the submission of false claims to Medicare for glucometers and repeated billing of Medicare for new meters for existing patients when Arriva itself had previously billed Medicare for meters for those patients within the five-year window in which beneficiaries are eligible to seek reimbursement for a new meter.
Finally, the settlement resolves claims that Arriva submitted false claims to Medicare on behalf of deceased beneficiaries after the Medicare program revoked Arriva’s Medicare supplier number for doing so in November 2016.
“The False Claims Act and related statutes exist to protect the public fisc and to ensure companies do not benefit from unfair competition by gaining an illegal advantage over competitors,” Acting U.S. Attorney Mary Jane Stewart for the Middle District of Tennessee said. “When companies engage in such practice, they can expect to be held accountable for their actions.”