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Roche Files Lawsuit Alleging Insurance Fraud Over Diabetes Test Strips

NEW YORK (360Dx) — Roche this week sued the former management of Utah-based Alliance Medical Holdings over alleged insurance fraud involving Roche's diabetes test strips.

In its complaint, Roche alleged that its lower-priced test strips intended for sale via mail order were obtained by Alliance Medical, which redirected them for sale through retail pharmacies where they are sold at higher rates. Alliance Medical then submitted insurance claims representing that they had dispensed the more expensive retail strips, the lawsuit charges.

Alliance Medical filed for Chapter 11 bankruptcy in 2017. In court filings, then-CEO Jeffrey Smith said that a key investor cut off funding to Alliance Medical when government officials raided the company's offices as part of a criminal investigation into its business operations.  

Roche's suit — filed in US District Court District of New Jersey  — contends that Alliance Medical and its affiliates submitted fraudulent reimbursement claims for nearly 1.9 million 50-count boxes of its test strips between 2011 and 2017. The Swiss healthcare giant said the scheme cost it $87 million in rebates to pharmacy-benefit insurers and a similar amount in retail sales.

The lawsuit names Smith and other former members of Alliance Medical's management, as well as a number of investment funds and a bank allegedly involved in the fraud as defendants. Roche is seeking at least $87 million in damages plus lawyers' fees, interest, and punitive damages.