Humana, Roche Diagnostics Face $45M Federal Kickback Lawsuit

Posted June 14th, 2018.

As It Appeared On
HealthPayer Intelligence

A federal lawsuit filed in 2014 that alleges Humana and Roche Diagnostics engaged in a $45 million kickback agreement has resurfaced in an Illinois federal court.

By Thomas Beaton

June 14, 2018 – Humana and Roche Diagnostics will face a $45 million federal kickback lawsuit after a whistleblower filed a False Claims Act violation, which alleges Roche tried to entice Humana financially to secure access to the payer’s business operations.

A federal judge in the Northern District of Illinois has dismissed two motions to appeal a 2014 whistleblower lawsuit, alleging that Humana was ready to terminate a contract with Roche Diagnostics in 2013 that would have effectively removed Roche’s diabetes glucose monitoring products from Humana formularies.

A whistleblower by the name of Crystal Derrick informed federal agencies that Roche Diagnostics overpaid Humana $45 million in drug rebates. Derrick’s testimony also suggested that Roche Diagnostics offered to accept a $27.5 million of the $45 million and would allow Humana to keep the remainder. She believes Roche used the additional payment in order to remain in Humana’s good graces and on the payer’s device formulary.

Humana officials negotiated with Roche and offered to pay back $20 million, then finally settled on an $11 million payment. Derrick, a former employee at Roche, was fired shortly after the negotiations when she explained to the deal’s potential legal implications to her supervisors.

Judge Elaine E. Bucklo dismissed the motions made by Roche and Humana saying that the False Claims Act is designed to encourage whistleblowers to report possible fraud within all industries.

Bucklo also dismissed Roche Diagnostics statements claiming that Derrick did not meet “particularity standards” when reporting potential fraud between Humana and Roche.

Bucklo stated that whistleblowers filing False Claims Act violations don’t need to provide highly specific details of the apparent fraud, but only the internal observations that indicate possible criminal activity.

“If Roche’s proposed standard was correct, a realtor would need to be a False Claims Act expert in order to report suspected fraud internally, which clearly is not the Act’s intended purposed,” Bucklo explained.

The law firm Sanford Heisler Sharps is working on Derrick’s behalf in the case and praised the actions by Bucklo as a victory for healthcare fraud whistleblowers.

“The Court affirms the important principle that financial arrangements between managed care organizations and pharmaceutical companies are not immune from the False Claims Act and Anti-Kickback Statute,” said Ross Brooks, co-chair of the whistleblower practice at Sanford Heisler Sharp.

“This decision is critical as watchdog groups scrutinize secretive financial arrangements among pharmaceutical companies, pharmacy benefit managers, and insurance companies.”

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