Settlement with Kmart over False Claims Act Allegations

Attorney General Jack Conway announced has that Kentucky has joined with other states, territories, and the federal government in reaching an agreement with Kmart Corporation to settle allegations that the company submitted false claims and false statements through its Kmart Pharmacy Centers to the federal government, state governments, and territories for payments related to partial fills of prescriptions.

"I am pleased that we have reached this settlement and are recovering thousands of dollars for a vital state program and for taxpayers," General Conway said.

Kmart will pay 30 states, Puerto Rico, the Virgin Islands, and the federal government a total of $2.55 million in civil damages and penalties to compensate Medicaid, Medicare, and various federal healthcare programs for harm suffered as a result of its conduct.

The lawsuit asserts that Kmart violated the federal False Claims Act by returning to stock and failing to delete or re-adjudicate prescriptions that were billed to federal health insurance programs, but were not picked up by customers.

This settlement is based on a whistleblower complaint against Kmart. The case was filed in the United States District Court for the Eastern District of Michigan by a private individual who filed the action under the federal false claims statute. As part of the settlement, Kentucky will receive $36,892 in restitution and other recovery.

A National Association of Medicaid Fraud Control Units team participated in the settlement negotiations with Kmart on behalf of the settling states. Team members included representatives from the Offices of the Attorneys General for the states of Florida, Indiana, New York, and North Carolina.


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