Blog Life Sciences Perspectives August 13, 2021

Alere Pays $198.75 Million to Settle False Claims for Allegedly Billing Medicare for Defective POC Devices, Not Charging Copays, and Sending Supplies to Deceased Patients

Alere Inc. and Alere San Diego Inc. (collectively “Alere”) have come under fire recently by the U.S. Department of Justice (“DOJ”) and other government agencies, agreeing to settle several rounds of accusations of False Claims Act violations for a total of $198.75 million.

The first series of settlements was announced by DOJ on July 8, 2021 and cost the company approximately $38.75 million in fines and penalties. Here, the medical device manufacturer was alleged to have billed Medicare for rapid point-of-care testing devices that Alere knew were defective.  More specifically, the government alleged that the INRatio blood coagulation monitors (manufactured by Alere) were defective.  The monitors were used by Medicare beneficiaries taking anticoagulant drugs to monitor their blood coagulation. Anticoagulants drugs can cause major bleeding when used in access or blood clots and strokes can develop when not enough medication is taken. DOJ alleged that Alere concealed the fact that the device was producing inaccurate results for some patients, resulting in several deaths and hundreds of injured beneficiaries. This practice was ongoing for a total of eight years, according to DOJ.

One month after this first massive settlement was announced, the DOJ announced an even more sizable settlement with Alere Inc.’s subsidiary, Arriva Medical (“Arriva”), a diabetes testing equipment supplier, totaling an additional $160 million to settle false claims related to an alleged kickback scheme. The DOJ purported that, from April 2010 through December 2016 – immediately prior to Abbott’s $5.3 billion acquisition of Alere in 2017 – Arriva (1) regularly waived and failed to collect Medicare beneficiaries’ cost-sharing amounts (i.e. copays); (2) sent glucose meters at no cost to patients; and (3) sent diabetic testing equipment to deceased patients.

Medical device makers, durable medical equipment suppliers, and Medicare providers of all sorts should take heed of these recent settlements and implement regular third party compliance and billing audits as part of their Compliance Program to help ensure that practices are aligned with government expectations and rules. In addition, companies acquiring, merging with, or investing in healthcare entities should incorporate complete third party billing and compliance testing as part of their due diligence in connection with these types of transactions to identify billing-related risks.

If you have any questions, please contact Anne Brendel (abrendel@goodwinlaw.com; 415-733-6047) or Matt Wetzel (mwetzel@goodwinlaw.com; 202-346-4208).

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