Alere (ALR) Plunges After Its Diabetes Unit Was Removed From Medicare for Allegedly Billing 211 Dead People
11/4/2016 11:11:23 AM
November 4, 2016
By Alex Keown, BioSpace.com Breaking News Staff
WALTHAM, Mass. – Shares of Alere Inc. (ALR) are down more than 13 percent this afternoon after a filing with the U.S. Securities and Exchange Commission showed its diabetes Unit, Arriva Medical, was removed from Medicare after allegedly billing more than 200 dead people.
Alere, which recently approved a merger with Abbott Laboratories (ABT), reported in its filing that the Centers for Medicare and Medicaid Services (CMMS), notified the company Oct. 5 about the filing discrepancies, Reuters reported. The company filed an appeal, which was denied today, The Street said. According to the CMMS, Arriva submitted 211 claims in the name of people who had died over a five year period. However, Reuters said that Alere’s notice only identified 47 people. Over the five year period, the company filed more than 5.7 million claims, Reuters added.
Citing Alere’s 10-K filing, Reuters said the company claimed it had conducted its own investigation and “did not believe that Arriva received or retained improper reimbursement for the DME (durable medical equipment) items it furnished.” Arriva provides diabetic testing supplies through the mail. The company is attempting to have its Medicare enrollment status reactivated, The Street said.
There is no word yet on what the latest trouble for Alere will mean to its merger with Abbott Laboratories—if anything. However, the relationship between the two companies has been strained and both companies have filed legal action against the other ahead of the finalization of the merger. On Thursday, Abbott filed a breach of contract lawsuit against Alere regarding documentation the company said has been withheld ahead of the merger. In its SEC filing, Alere alluded to legal action the company was taking against Abbott over the deal, including an August claim that Abbott was failing to comply with its obligations set forth in the merger agreement related to antitrust approvals.
In February, Abbott struck the deal with Alere to allow the company to “provide new, flexible, cost-effective, high-quality products to help health systems meet growing demand in both in-patient and out-patient settings.” The company said Alere’s portfolio of products will provide the company entry into new outlets, including doctors' offices, clinics, pharmacies and at-home testing. Abbott said its combination with Alere will offer the broadest point of care menu of infectious disease, molecular, cardiometabolic and toxicology testing, expanding Abbott's platforms to include benchtop and rapid strip tests. Since that deal was struck though, Abbott has been looking for ways to get out of the deal. A possible reason the deal may be in jeopardy is related to a U.S. grand jury investigation into Alere’s sales practices in Africa, Asia and Latin America, Reuters reported. At the same time as the grand jury investigation was announced, Alere said it was forced to delay its annual 10-K filing due to the reanalyzing of revenue cutoff, in Africa and China for 2013, 2014 and 2015. Alere received a notice of non-compliance from the New York Stock Exchange in March over the matter.
On Thursday Alere posted its third quarter financial reports, which showed a 4 percent decrease in revenue for the quarter compared to the same quarter of the prior year.
Shares of Alere are currently trading at $36.65, down from its daily high of $43.32.
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