Kmart settles pharmacist whistleblower lawsuit for $1.4 million

Kmart has agreed to pay $1.4 million to settle charges it used illegal inducements to encourage Medicare patients to forego generics for more expensive brand names.

According to the U.S. Department of Justice, Kmart pharmacies "violated a federal prohibition against offering benefits to Medicare beneficiaries to influence their decisions about which pharmacies to use." The activities were alleged to have occurred between June 2011 and June 2014.

See also: Pharmacist nets $31 million from whistleblower cases

Kmart was accused of using drug manufacturer coupons to reduce co-pays for Medicare recipients while increasing government reimbursement to its pharmacies.

The federal government also accused Kmart of improperly offering discounts on gasoline purchases at participating gas stations based on the number of prescriptions filled.

Kmart, which has about 780 in-store pharmacies, settled without any determination of liability and did not issue any comment concerning the settlement.

The case rose from a 2013 whistleblower lawsuit from Joshua Leighr, a former Kmart pharmacist from Kansas City, Missouri. Leighr will receive $248,500 from the settlement.

Last year, Rite Aid agreed to pay $2.99 million to settle charges it used gift cards to entice Medicare and Medicaid beneficiaries to transfer prescriptions to its pharmacies.

Rite Aid was accused of “knowingly and improperly” influencing patients to transfer their prescriptions by offering them gift cards.

That case stemmed from allegations made in a whistleblower lawsuit by pharmacist Jack Chin, who received $508,300 from the settlement.