Court Denies Motions to Dismiss in Case Alleging Settlement Between Roche Diagnostics and Humana Violates Anti Kickback Statute

Court Denies Motions to Dismiss in Case Alleging Settlement Between Roche Diagnostics and Humana Violates Anti Kickback Statute

Roche Diagnostics Corporation (Roche) and Humana, Inc. will face allegations of violating the federal Anti-Kickback Statute, alleging that Roche attempted to entice Humana with financial incentives to secure benefits, such as exclusivity in Humana’s formularies – which are official lists of medicines that may be prescribed.

The case, Crystal Derrick v. Hoffman-La Roche LTD, et al., seeks to determine whether a negotiated settlement of allegedly overpaid contractual rebates constitutes unlawful remuneration under the federal Anti-Kickback Statute. No. 1:2014cv04601, Document 84 (N.D. III. 2018).

Whistleblower, Crystal Derrick filed a qui tam lawsuit against Roche and Humana alleging that defendants violated the False Claims Act “by engaging in a business scheme in violation of the Anti-Kickback Statute,” and by retaliating against her for questioning the lawfulness of their business dealings. Id. 1, 15.

The complaint alleges that after Humana threatened to remove Roche’s products from its formulary, Roche discovered that it has overpaid Humana $45 million in drug rebates under their agreement that Humana would put Roche’s glucose monitoring products on formularies for certain of its government plans. Id. 4.

Derrick, former Roche accounts manager in charge of overseeing Humana’s account, alleges that Roche sought to leverage the overpayment to secure its position on the Humana formularies. Negotiations between Roche and Humana continued for several months and ultimately defendants entered into a contract to place Roche products back on Humana’s formularies and to exclude competing brand products from the formularies. Id. 5. The same week that contract was executed, Humana paid Roche less than $11 million to settle its alleged $45 million debt from receiving overpayments.

According to Derrick’s testimony, the two agreements were linked and “Roche reserved

the right to recover the full amount owed if Humana did not satisfactorily perform its obligations under the parties’ new agreement.” Id. 5.

The case against Roche and Humana is moving forward in the Northern District of Illinois. The outcome of this case may give rise to future False Claims Act allegations in many industries, including the health care industry. It is not uncommon for manufacturers and providers to settle complex payment disputes as a normal course of their business. Instances where alleged overpayments are at issue, settlement negotiations could potentially create Anti-Kickback Statute risks.

It is best practice to fully document the basis for any settlement. Also, consider potential Anti-Kickback Statute risks if settlement negotiations regarding overpayments could conceivably be viewed as linking a settlement amount to other benefits, when government programs or payments are involved.

Defending Against False Claims Act Allegations

Ashley D. Adams, PLC is an Arizona-based criminal defense law firm specializing in white collar criminal defense. Our firm has successfully represented numerous health care clients, including hospitals, physicians, pharmacies, and other health care providers. As a former health care fraud prosecutor with the United States Attorney’s Office, Ashley D. Adams understands the government’s tactics and knows how to establish the best possible defense for your case.

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