Kmart has agreed to pay more than $1 million to settle allegations its pharmacies overbilled government health care programs for some prescription drug purchases in Illinois, the Illinois State Police said Tuesday.
The deal is part of a $59 million settlement covering federal, state and insurance company claims against Kmart, part of Hoffman Estates-based Sears Holdings Corp., that the U.S. Department of Justice announced last month.
The settlement arose from a 2008 lawsuit filed by an Ohio Kmart pharmacist claiming the chain offered cash-paying customers discounts on generic drug prices but didn’t report the discounted prices to federal health care programs, according to state police.
By allegedly failing to disclose the discounts, Kmart wasn’t accurately reporting its “usual and customary” rates, which health programs use to set the amount pharmacies will be reimbursed for drug purchases, state police said.
“The Illinois State Police Medicaid Fraud Unit is pleased with the announcement of this settlement. Deceptive practices like this hurt the citizens of Illinois,” Illinois State Police Capt. Brian Ley said in a news release. “The ISP is committed to protecting the integrity of Illinois’ Medicaid system and will work tirelessly to that end.”
The settlement proceeds, which cover allegations from September 2004 to December 2014, will be shared between the federal and state government, state police said. The state of Illinois’ portion will be nearly $421,000, said Elizabeth Lepic, assistant bureau chief of the state police’s Medicaid fraud control bureau.