Defunct Abbott Labs Units Agree to $160M Deal In FCA Case

A now-inoperative diabetic testing equipment supplier last owned by Abbott Laboratories has agreed to pay $160 million to settle claims that it charged Medicare for unnecessary equipment and wrongly paid kickbacks, according to the U.S. Department of Justice.

AbbottPhoto Credit: Shutterstock

Alere Inc. and its subsidiary Arriva Medical LLC both agreed to the steep settlement in the False Claims Act case that originated after whistleblower Gregory M. Goodman filed, leading to DOJ intervention.

“Paying illegal inducements to Medicare beneficiaries in the form of free items and routine copayment waivers can result in overutilization and waste taxpayer funds,” Bryan M. Boynton, acting assistant attorney general for the Middle District of Tennessee, said in a statement. “We will continue to protect the integrity of the Medicare program by pursuing fraudulent claims arising from violations of the Anti-Kickback Statute or other applicable reimbursement requirements.”

The DOJ alleged that Arriva dispensed free glucometers to Medicare beneficiaries for years, arguing that pattern equated to kickbacks. When the beneficiaries were not yet allowed to get a new device, Medicare denied paying for those services. Arriva then allegedly gave the patients a free device anyway, in exchange for additional supply orders from patients.

The DOJ stated that “Arriva, with Alere’s approval, allegedly systematically provided to all of its new patients, and billed Medicare for, a meter without regard to the patients’ eligibility for one.” Additionally, Arriva neglected to collect Medicare copayments and made claims to the government for payment for dead patients in some instances, the government alleged.

Abbott said in a statement on Monday that the case “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.”

As part of the settlement, Gregory Goodman — the former Arriva sales rep and whistleblower — will receive a $28.55 million payout.

“It’s a great result,” Jerry Martin, an attorney for Goodman, told Law360 on Monday. “It’s really a David and Goliath outcome.”

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