Judge allows test strip lawsuit to proceed
By HME News Staff
Updated 9:57 AM CDT, Tue October 4, 2022
NEWARK, N.J. - A judge for the U.S. District Court of New Jersey has ruled that Roche Diagnostics Corp. and LifeScan can move forward with lawsuits against Alliance Medical Holdings and its network of retail pharmacies.
Roche, which is represented by Patterson Belknap Webb & Tyler LLP, and LifeScan allege in their lawsuit that Alliance defrauded them by purchasing wholesale test strips on the secondary market and then marketing and selling them as higher-priced retail test strips.
They allege that, between 2013 and 2017, Alliant collected millions in fraudulent reimbursement from insurers for retail strips that was up to three times the amount paid for the wholesale strips. Those insurers then collected rebates from Roche and LifeScan to offset the costs incurred through the allegedly fraudulent reimbursement.
“The rebates were wrongfully issued because only retail strips were eligible for rebate and defendants did not dispense retail strips, despite submitting insurance claims saying they had,” the lawsuit states.
Plaintiffs include former CEO Jeffrey Smith, former CFO Justin Leavitt, former General Counsel David Grant, former Director of Pharmacy Operations Steven L. Hadlock, former Chief Pharmacy Officer Sahily Paoline, and former Chief Revenue Officer Blaine Smith, as well as several business partners, including investment groups and a national banking association.
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