By Akankshita Mukhopadhyay

(Reuters) - Diagnostic company Alere Inc said on Friday the Medicare enrollment of one of its units had been revoked effective Nov. 4 by the Centers for Medicare and Medicaid Services (CMS), which said the unit had submitted claims for 211 dead patients.

Shares of Alere, which is being bought by Abbott Laboratories, fell as much as 16 percent in heavy trading.

The CMS sent the unit, Arriva Medical LLC, a notice on Oct. 5 and revoked the unit's enrollment after Alere unsuccessfully appealed the decision on Nov. 2, Alere disclosed in a regulatory filing. (http://bit.ly/2elHNZ7)

Arriva is Alere's durable medical equipment, or DME supply business, that specializes in sending diabetic testing supplies via mail order.

The CMS said Arriva submitted 211 claims for dead people over five years, but its notice only identified 47 of the claims, Alere said.

The 211 claims account for less than 0.003 percent of the roughly 5.7 million claims Arriva submitted during the five year period in question, the company said.

"We are confident that the Medicare claims in question were submitted in response to what were understood to be valid refill orders from Medicare beneficiaries or their caregivers, and that Arriva has not received or retained improper reimbursement for these claims," an Alere spokesman told Reuters.

"We believe this matter is a consequence of the lag in timing between when Arriva processes reimbursement requests and when the CMS system updates patient status," he said.

Alere said it had conducted an initial investigation and that it did not believe that Arriva received or retained improper reimbursement for the DME items it furnished.

Alere on Friday also reported lower-than-expected revenue for the third quarter. Alere said Arriva's revenue of nearly $88 million for the nine months ended Sept. 30 accounted for about 5.2 percent of the company's total revenue.

The company's stock was down 13 percent at $36.71 in afternoon trading. About 3.9 million shares changed hands, nearly nine times the stock's 25-day moving average.

(Reporting by Akankshita Mukhopadhyay in Bengaluru; Editing by Savio D'Souza and Saumyadeb Chakrabarty)