Humana, Roche Settle False Claims Act Lawsuit, Agree to Pay $12.5M

Posted February 10th, 2021.

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By Kelsey Waddill

February 10, 2021 – An Anti-Kickback and False Claims Act lawsuit against Humana and Roche Diagnostics Corp. and Roche Diabetes Care, Inc. (Roche) has finally come to a close, Sanford Heisler Sharp, LLP announced.

The companies will pay a settlement to the whistleblower, according to court documents that HealthPayerIntelligence received from Sanford Heisler Sharp by email.

Altogether, Humana and Roche will pay out $12.5 million. Of that sum, 29 percent or more than $3.6 million will go to the whistleblower—also known as the “relator” in court documents.

The case started in 2014 when the whistleblower—a former employee at Roche Diagnostics—came forward to say that Humana and Roche had submitted false claims through Humana’s Medicare Advantage program.

According to the whistleblower, Humana and Roche entered an agreement in which the payer’s debts to the blood sugar monitor manufacturer were forgiven in exchange for government business. The whistleblower stated that Humana favored Roche’s products when selecting diabetes testing products for Medicare Advantage plans.

“This case demonstrates that Medicare Advantage Organizations, pharmacy benefit managers, and pharmaceutical companies can be held responsible for giving or accepting payments in exchange for access to Medicare Advantage funds,” said Inayat Ali Hemani, New York partner and co-chair of Sanford Heisler Sharp’s Whistleblower Practice.

“Our client has helped the Government recover millions of dollars and shed light on secretive transactions between pharmaceutical companies and Medicare Advantage Organizations.”

The whistleblower testified that Humana received $45 million in drug rebates from Roche, much more than the payer was supposed to receive. Humana then agreed to pay back $27.5 million to Roche, instead of the full amount.

The Sanford Heisler Sharp, LLP legal team hailed the whistleblower’s choice to come forward and urged others to do the same.

“Our client had the courage to hold Defendants accountable, at great personal risk. We are honored to have represented her and hope that others will continue to demonstrate similar courage and initiative,” said Kevin Sharp, managing partner of the firm’s Nashville office.

“The recovery obtained in this case is a testament to the power of whistleblowers in America,” added Michael D. Palmer, partner in Sanford Heisler Sharp’s New York office. “This is truly an excellent result for both the Government and the Relator.”

Humana declined to comment on the case.

Anti-kickback statutes in the Anti-Kickback and False Claims Act—which applies to cases such as this—have undergone some remodeling in recent months.

In late 2020, the Trump Administration finalized a new rebate rule which reduced safe harbors for rebates. The new rule protected drug price discounts at the pharmacy counter, with the goal being that savings are passed directly to the consumer. It also offered a safe harbor for fixed-fee service arrangements, which often occur in government contract bids.

The rebate rule was a source of contention between the former administration and the payer industry. While the administration expected that the new rule would drive savings to the consumers, payers projected that the rule—combined with other efforts to diminish drug prices—would lead to premium hikes of up to 25 percent for Medicare beneficiaries.

As the Biden administration took office in January 2021, it froze all of the previous administration’s rules in order to review them. The administration decided to push the rebate rule’s effective date back two years until 2023.

However, for many payers, the delay is not enough. America’s Health Insurance Plans (AHIP) has called on the new president to remove the rebate rule altogether.

“While we continue to urge full withdrawal of the prior Administration’s rule, this delay will allow Medicare Part D plans in 2022 to provide the benefits and premiums seniors have come to expect,” said Matt Eyles, president and chief executive officer of AHIP.

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