What once was one of the country’s largest Medicare mail-order diabetic testing suppliers and its parent company have agreed to pay $160 million to resolve allegations they violated the False Claims Act.

The case was brought under the qui tam, or whistleblower provisions of the False Claims Act by Gregory Goodman against Arriva Medical LLC, and its parent Alere Inc. (United States ex rel. Goodman v. Arriva Medical LLC et al.) Alere is a medical device company based in Abbott Park Ill. It acquired Arriva Medical in 2011. Arriva was based in Coral Springs, Fla. and ceased operations in December 2017. Abbott Laboratories closed on its purchase of Alere in 2017.

Goodman was an employee at an Arriva call center in Antioch, Tennessee. It was alleged that from April 2010 until the end of 2016 Arriva, with Alere’s knowledge and approval, paid kickbacks to Medicare beneficiaries by providing them with free or no cost digital glucose testing kits and other diabetic testing supplies. They did so by routinely waiving or failing to collect copayments. Arriva also allegedly waived copayments when customers complained that Arriva had advertised, or otherwise indicated, that beneficiaries would be provided their supplies for free.

In addition, it was alleged that Arriva, with Alere’s approval, provided new glucose meters to all new patients and then billed Medicare for them regardless of whether the patient was eligible. Medicare beneficiaries can only seek reimbursement for a new meter every five years.

The settlement also resolved claims that Arriva submitted false claims to Medicare on behalf of deceased beneficiaries. As a result, Arriva’s Medicare supplier number was revoked in November 2016.

Arriva’s founders, David Wallace and Timothy Stocksdale previously paid $1 million to resolve allegations that they took part in the kickback scheme. Another company, Grapevine Billing and Consulting Services Inc., also based in Florida, and its president Ted Albin were not parties to this settlement and remain defendants in ongoing litigation.

Albin and Grapevine filed motions to dismiss the case arguing that the FCA claims were outside the six-year statute of limitations. They also argued that the fraud was not pleaded with sufficient particularity. Finally, they argued that claims of unjust enrichment also were untimely and failed on the merits because the complaint failed to allege that any of the “allegedly ill-gotten gains actually ended up in Albin’s or Grapevine’s pockets.” The court denied their motion to dismiss. (Case No. 3:13-cv-0760).

This is the second DOJ settlement in recent weeks involving Abbott’s Alere. In July, the company agreed to pay $38.75 million to resolve allegations that the company violated the False Claims Act by billing and causing others to bill Medicare for defective NRatio blood coagulation monitors used by Medicare beneficiaries taking anticoagulant drugs, such as warfarin.

The Health Law Offices of Anthony C. Vitale represents whistleblowers as well as those facing allegations of False Claims Act violations. Our team of attorneys can assist with creation and implementation of compliance programs that that allow you to identify and correct any problems before you become the target of an investigation. For more information call us at 305-358-4500 or email info@vitalehealthlaw.com.