Capitation Payments Aside, Transactions Between Government-Sponsored Managed Care Plans and Their Providers or Suppliers, Tainted by ‘Kickbacks,’ Are a Potential False Claims Act Violation, Says Court

Earlier this month, the federal District Court for the Northern District of Illinois, in U.S. ex rel. Derrick v. Roche Diagnostics Corp., sustained a whistleblower, or qui tam, complaint under the False Claims Act filed by a discharged employee of a manufacturer of glucose-testing products, and brought against the manufacturer and a Medicare Advantage (managed care) plan, asserting violations of the anti-kickback statute. The whistleblower alleged that the manufacturer (Roche Diagnostics) had compromised an earlier claimed debt owed to it by the Medicare Advantage plan (Humana)  – the so-called “remuneration” or kickback – in exchange for being restored to the plan’s formularies for glucose-testing products covered by Medicare. Significantly, Medicare paid the managed care plan a fixed, or capitated, monthly amount for all covered health and medical services provided or arranged for each plan enrollee, and no allegation was made that the…

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