Roche Diagnostics whistleblower wins $3.6M in settlement agreement

A former manager at Roche Diagnostics Corp. who filed a whistleblower lawsuit against the Indianapolis-based company two years ago has won $3.625 million as her reward in a $12.5 million settlement agreement.

Crystal Derrick, who was a national account manager in the diabetes division of the company, was awarded the money nearly two years after filing the whistleblower case against her former employer, according to documents filed Monday in U.S. District Court in Chicago.

In her lawsuit, she said Roche had paid insurance company Humana Inc., based in Louisville, for access to certain formularies after Roche decided not to recover rebate overpayments it had learned Humana owed it.

She claimed the two companies violated the Anti-Kickback Statute and False Claims Act, and caused false claims to be submitted to the Medicare Advantage program, defrauding taxpayers.

The Anti-Kickback Statute makes it a felony to knowingly pay or accept money to induce anyone to furnish any item or service for payment under a federal health care program.

In 2020, the parties filed motions on the merits of the case. While the motions were pending, the parties agreed to settle the case.

As part of the settlement, Derrick won 29% of the funds. Whistleblowers often receive a large portion of settlements for their roles in bringing fraudulent cases to light. Derrick left Roche in December 2013.

In an email to IBJ, a Roche spokeswoman confirmed the settlement but said she could not comment further. Humana did not return messages left by IBJ for a comment.

According to the lawsuit, the dispute began on March 6, 2013, when Humana notified Roche that its medical benefit rebate agreement would be terminated in 90 days, according to the lawsuit. As a result, Roche’s products would no longer appear on Humana’s formularies.

Formularies are a list of prescription drugs or medical products covered by an insurance plan. Humana’s formularies included a wide range of Roche diabetes products, including its Accu-Chek product line, insulin pump and test strips.

“This development was viewed within Roche as a significant blow to the company, particularly given that Roche had recently experienced other financial setbacks,” the lawsuit said.

Roche, which employs more than 3,000 on the northeast side of Indianapolis, has been struggling on the diabetes side of its business, which is fiercely competitive.  Roche has seen a decade of declining sales in that market.

In May 2013, soon after Derrick took over the Humana account from another Roche manager, she discovered that Humana had not complied with the terms of its agreement with Roche.

Under the contract, Humana was required to charge its members copays for non-formulary diagnostic products that were at least $25 higher than their copays for Roche products that were on the formulary. Therefore, Roche had been paying Humana rebates that were not owed under the terms of Roche’s contract with Humana, the lawsuit said.

She arranged a face-to-face meeting in Pittsburgh with a Humana manager to discuss the overpayment. The two agreed that Roche should quantify the amount of the overpayment. Roche later calculated the total amount of the overpayment at $45 million.

“Roche immediately recognized an opportunity to be placed back on Humana’s formularies,” Derrick’s lawsuit said.

In her complaint, Derrick accused Humana and Roche of entering a kickback relationship in which debt forgiveness was traded for access to government-funded Medicare business.

“Specifically, (Derrick) alleged that Roche forgave millions of dollars owed by Humana in exchange for Humana purchasing Roche diabetes testing supplies and favoring Roche diabetes testing supplies over competitors’ products in Humana’s Medicare Advantage plans,” according to a statement Monday from her lawyers, Sanford Heisler Sharp in New York City.

After the government declined to intervene, Derrick and her counsel litigated the case on the government’s behalf.

“The recovery obtained in this case is a testament to the power of whistleblowers in America,” said Michael D. Palmer, partner in Sanford Heisler Sharp’s New York office, in written remarks.