Two separate whistleblower lawsuits accusing pharmacy company Med-Fast of Aliquippa, Pennsylvania, Iserve Technologies, a Med-Fast subsidiary, and executives of the companies have led to a $2,666,300 resolution of criminal and civil charges connected to a scheme of recycling unused drugs for re-use and re-sale to nursing homes.
The U.S. Attorney’s Office for the Western District of Pennsylvania said that Iserve pleaded guilty to participating in a conspiracy to fill prescriptions for nursing homes with recycled unused drugs that were shuffled into drug stocks on hand at Med-Fast’s Institutional Pharmacy. Iserve will pay $400,000 in forfeiture, a $44,600 criminal fine, and a $400 special assessment.
Additionally, the court ordered Iserve to pay the U.S. $1,555,000 as part of a civil settlement agreement to reimburse Medicare and the Pennsylvania Medicaid program for overbilling.
Federal prosecutors alleged that Med-Fast drivers collected the unused medications from nursing homes and delivered them to an Iserve operation inside the Med-Fast facility in Aliquippa. Workers at the facility would remove the recycled unused drugs and return them to stock.
This practice caused drugs from different manufacturers and different expiration dates to be mixed in with other drugs in stock bottles. The employees were then ordered to produce fake labels and send the medications out for resale to other nursing homes.
The criminal charges against Iserve follow earlier guilty pleas on related charges against Gino Cordisco, 47, of Mars, Pennsylvania, the former Med-Fast vice president of store operations, and Correna Pfeiffer, 37, of Monaca, Pennsylvania, the former manager of a Med-Fast Institutional Pharmacy in Aliquippa.
Med-Fast and its owner Douglas Kaleugher also agreed to pay the U.S. about $666,000 to settle civil False Claims Act allegations, bring the total amounts paid to 2,666,300.
According to the U.S. Attorney’s Office, the civil settlement resolves allegations in two separate whistleblower lawsuits filed in federal court in Pittsburgh, Pennsylvania.
The whistleblower complaints alleged that Med-Fast violated the False Claims Act by distributing and submitting claims to Medicare for the drugs it had recycled from nursing facilities serviced by its institutional pharmacy and submitting claims for drugs that differed from the medications identified as part of the claims submitted to the federal healthcare programs.
The settlement stemming from the whistleblower complaints also resolves allegations that Med-Fast violated the False Claims Act by billing Medicare and Pennsylvania Medicaid for the retail-packaged version of diabetes testing strips when it had actually supplied patients with cheaper mail-order-packaged version of the same strips.
The conspiracy charge against Mr. Cordisco carries a maximum total sentence of five years in prison, a fine of $250,000, or both. The conspiracy charge against Iserve Technologies, Inc. carries a maximum total sentence of five years probation, a fine of $500,000, or both.
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U.S. Department of Justice