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Kmart to pay more than $84K for overbilling Hawaii Medicaid customers

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HONOLULU -

Kmart has agreed to pay $84,192.68 to resolve the Medicare overbilling allegations in Hawaii, according to Hawaii Attorney General Doug Chin.

The Kmart Corporation, owned by Sears Holdings Management Corporation, agreed to settle allegations that Kmart charged the Hawaii Medicaid program more than its usual and customary charge for certain drugs.  The settlement proceeds will be shared between the federal and state government.

The Hawaii Medicaid Fraud Control Unit in the Attorney General's office worked with several states' Medicaid Fraud Control Units and the United States Department of Justice to resolve these allegations impacting the State of Hawaii during the time period of September 1, 2004 through December 31, 2014. 

According to Chin, in the mid-2000s, Kmart, along with many other pharmacies, began offering discounted generic drugs to their cash-paying customers (typically $4 for a 30-day supply).  Kmart then began charging $15 for a 90-day supply.  The program was later expanded to include 30- and 60-day supplies.

Although some pharmacies with similar programs gave federal health care programs the benefits of these prices, it was alleged that Kmart did not. Rather, Kmart billed and received $5 from Medicaid for a prescription that cash-paying customers could purchase for $4. As a result of Kmart’s actions, Kmart received reimbursement amounts from Medicare, Medicaid and other federal healthcare programs that were higher than it was entitled to receive in violation of federal and state false claims statutes. 

"Thanks to the work of the Medicaid Fraud Control Unit in Hawaii and elsewhere, state and federal taxpayer dollars have been recovered," said Chin.

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