Alere sues CMS to reinstate its Arriva diabetes unit

Alere (NYSE:ALR) yesterday said that it’s suing to force the Centers for Medicare & Medicaid Services to reinstate its Arriva diabetes division’s enrollment, after the government health insurer yanked the accreditation last month over issues with an excess of claims submissions for deceased patients.

Arriva, which develops durable medical equipment for diabetic testing, was informed Oct. 12 that its Medicare enrollment would be revoked by CMS, which said at the time that Arriva submitted claims for 211 deceased patients. Alere attempted to appeal the determination, but the appeal was denied Nov. 2 and the group’s enrollment in CMS was revoked 2 days later.

Yesterday Alere said Arriva appealed to the CMS Administrative Law Judge and expects a hearing within 30 days and a decision within 3 months.

“We believe the recent action by CMS to remove Arriva from CMS billing is unlawful, arbitrary and capricious, and harmful to the more than 500,000 patients who depend on Arriva for these critical supplies. Our commitment to patients is unwavering, and because we are confident that this ruling will be overturned, Arriva is continuing to provide patients with the supplies they need as the appeals process proceeds. We are confident that Arriva is in compliance with CMS guidelines and look forward to an expeditious and favorable outcome for both Arriva and the hundreds of thousands of patients who depend on us. The number of purported instances cited by CMS is de minimis relative to the nearly 5.8 million total claims filed by Arriva during that same period,” the company said in a prepared statement.

Alere said it also filed a federal lawsuit to force CMS to stay the process and reinstate its billing number while its ALJ appeal is heard. A decision on Arriva’s motion to enjoin is expected by Jan. 5, 2017, the company said.

Alere has said that the 211 claims allegedly made for dead people made up less than 0.003% of its 5.7 million filed claims.

The Waltham, Mass.-based company is set to be acquired by Abbott (NYSE:ABT), but the $5.8 billion deal, announced in February, soon ran into trouble. A March 11 subpoena from the U.S. Justice Dept. sought documents on Alere’s dealings with 3rd-party distributors and foreign healthcare officials and the company was late in filing its full-year results for 2015.

Alere in April rejected a $50 million offer from Abbott to spike the merger and a few months later sued Abbott, looking to force its would-be acquirer to obtain all antitrust approvals required to complete the acquisition. In early September, Delaware Chancery Court Judge Sam Glasscock put the lawsuit on the fast track and urged the companies to try and talk things out; an attempt at mediation failed later that month.

And earlier this month, Abbott filed a lawsuit seeking to terminate the buyout, citing a “substantial loss in Alere’s value.”

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