Alere and its now-defunct subsidiary Arriva Medical—formerly the nation’s largest supplier of mail-order diabetes testing equipment for Medicare patients—have agreed to a whopping $160 million settlement with the U.S. Department of Justice.
The case, which was initially filed in 2013 and received DOJ backing in 2019, was first brought through the False Claims Act by whistleblower Gregory Goodman, a former Arriva call center employee. It ultimately claimed that Alere and Arriva spent the better part of a decade fraudulently charging Medicare for shipments of its supplies.
According to the settlement, with Alere’s approval, Arriva regularly waived or simply didn’t collect Medicare copayments and sent new glucose meters at no cost to patients who weren’t yet eligible for reimbursable upgrades.
Arriva is also accused of seeking federal reimbursement for testing equipment knowingly sent to deceased patients—an allegation that caused the Centers for Medicare & Medicaid Services to revoke Arriva’s supplier number in November 2016. Arriva eventually ceased operations in December 2017.
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Though Alere and Arriva agreed to pay the hefty fine, their involvement in the settlement does not serve as an admission of liability.
About $28.5 million of the fine will go to Goodman, the case’s original whistleblower. The $160 million price tag joins another $1 million paid by David Wallace and Timothy Stocksdale, Arriva’s co-founders, in 2019 to settle claims of their own involvement in the alleged kickback scheme.
Not included in the settlement was Ted Albin, a former consultant to Alere, who the DOJ added to the lawsuit in 2019 and remains a defendant in the ongoing case.
“Engaging in activities that result in the submission of false claims to Medicare diverts funding from the necessary treatment and medical supplies beneficiaries need,” said Derrick Jackson, special agent in charge at the U.S. Department of Health and Human Services’ inspector general’s office. “We will continue working with our law enforcement partners to hold accountable those who seek to enrich themselves by submitting false claims to federal healthcare programs.”
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The alleged fraud scheme took place between April 2010 and the end of 2016, months before Abbott finalized its $5.3 billion acquisition of Alere in October 2017. In the year leading up to the deal’s closure, however, Abbott attempted to back out due to what it labeled “damaging business developments” that had caused a “substantial loss” in the value of the acquisition.
The deal did eventually go through—after Alere filed a countercomplaint to reject Abbott’s offer of terminating the proceedings for $50 million—at a price about $500 million below the original offer.
In a statement sent to Fierce Medtech, Abbott said of the Arriva settlement, "This matter relates to alleged activities that took place prior to Abbott's acquisition of Alere and was previously disclosed by Alere in financial filings. This business was discontinued shortly after the transaction closed."
Since then, however, the Abbott subsidiary has remained plagued by issues. Just last month, the DOJ settled yet another lawsuit against Alere, this one for $38.75 million.
In that case, which also concerned allegations levied before the Abbott acquisition, the government accused Alere of continuing to sell its INRatio blood coagulation monitors for about eight years after becoming aware of a defect in the device that was linked to more than a dozen deaths and hundreds of injuries, including intra-cerebral hemorrhaging and cardiovascular events caused by major bleeding episodes.
That suit, too, was settled without an admission of liability or guilt.Editor's note: This article was updated on Aug. 5 to include a statement from Abbott.