Case Summary

Michael Yarberry worked as a pharmacist at Kmart for over ten years at various stores in several states. On July 21, 2009, Mr. Yarberry filed a qui tam action against Sears, Kmart’s parent corporation, and Kmart alleging that the defendants engaged in a scheme to increase its pharmacy volume and revenue by implementing a series of pharmacy incentive programs. Call out text. Contrary to federal law, these programs paid various forms of monetary incentives to group health plan beneficiaries. Specifically, the defendants were involved in four fraudulent schemes.

On July 21, 2009, Mr. Yarberry filed a qui tam action against Sears, Kmart’s parent corporation, and Kmart alleging that the defendants engaged in a scheme to increase its pharmacy volume and revenue by implementing a series of pharmacy incentive programs.

First, the defendants offered government healthcare program (“GHP”) beneficiaries cash gift cards to encourage them to fill their new prescriptions and/or to transfer their prescriptions from another pharmacy. While this program was initially targeted at the local level, in July 2009 the defendants introduced a nationwide gift card incentive program, known as the “Smart Squad” Pharmacy Transfer Program.

Second, the defendants instituted a program in which it matched any coupons or gift cards offered by a competitor pharmacy. As a result of this program, the defendants effectively paid the GHP beneficiaries a kickback for filling their prescriptions at their pharmacies.

Third, in 2009 the defendants offered its front-end, non-pharmacy customers a “Shop Your Way Rewards” (“SYWR”) card that could later be redeemed by way of cash gift cards. In September 2010, this program was extended to pharmacy customers who could redeem their points for non-prescription purchases.

Fourth, the defendants implemented the Prescription Savings Club (“PSC”) in July 2009, which offered all pharmacy customers certain 30-day and 90-day supplies of generic pharmaceuticals at discounted rates in return for them paying an annual $10 enrollment fee.

After litigating this case for five years, the case was amicably settled in July 2014. As part of the settlement, the relator received a 28% relator’s share.

TYPE

False Claim Healthcare Fraud

CASE

U.S. ex rel. Yarberry v. Sears Holding Corporation, et al.

CASE NO.

Case No. 09-cv-00588-MJR-PMF (S.D. Ill.)

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