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United States ex rel. Darla Reid v. Med-Fast Pharmacy, Inc.
Western District of Pennsylvania Courthouse - Pittsburgh, Pennsylvania
Case Number: 13-cv-715
Judge: Robert C. Mitchell
Court: United States District Court for the Western District of Pennsylvania (Allegheny County)
Plaintiff's Attorney: Colin J. Callahan for the United States
Steve Stallings for Darla Reid
Defendant's Attorney: David Strassburger and Laura Gutnick
Description: Pittsburgh, PA - Iserve Technologies, Inc. Pled Guilty in Connection with Guilty Pleas of Former Exec and Manager of Med-Fast Pharmacy Inc.
Individuals and entities associated with Med-Fast Pharmacy, Inc. (“Med-Fast”) have resolved criminal and civil charges associated with Med-Fast’s improper submission of claims to the Medicare and Medicaid programs.
Iserve Technologies, Inc., a company co-located with and operated out of Med-Fast, participated in a conspiracy to fill prescriptions for nursing homes with recycled unused drugs that were commingled with drug stocks on hand at Med-Fast’s Institutional Pharmacy. The court sentenced it to pay $400,000 in forfeiture, $44,600 in a criminal fine and a $400 special assessment. Iserve was also ordered by the court to pay to the United States $1,555,000, in accordance with a Civil Settlement Agreement to reimburse the Medicare and Medicaid Programs for overbilling. The Iserve criminal charges follow the earlier guilty plea on related charges against the former Vice President of Store Operations for Med-Fast, defendant Gino Cordisco, 47, of Mars, Pennsylvania, and the former manager of the Med-Fast Institutional Pharmacy, Correna Pfeiffer, 37, of Monaca, Pennsylvania.
Med-Fast Pharmacy, Inc., its owner Douglas Kaleugher, and related entities also have agreed to pay the United States additional monies to settle civil False Claims Act allegations. The total amounts paid, including the above sums, total $2,666,300. The civil settlement resolves allegations in two separate whistleblower lawsuits filed in federal court in Pittsburgh, Pennsylvania. The settled claims contended thatMed-Fast violated the False Claims Act by distributing and submitting claims to Medicare for medication that it had either recycled from long-term care facilities serviced by its institutional pharmacy, or that otherwise differed from the medications identified as part of the claims submitted to the United States. The settlement also resolves allegations that Med-Fast violated the False Claims Act by submitting claims to Medicare and Pennsylvania Medicaid that sought reimbursement for the retail-packaged version of diabetes testing strips, while actually supplying patients with cheaper mail-order-packaged version of the same strips.
These matters were investigated by The U.S. Food and Drug Administration-OCI, the Drug Enforcement Administration-Diversion Investigators, the Office of Inspector General of the Department of Health and Human Services and the Federal Bureau of Investigation. Assistant U.S. Attorney Nelson P. Cohen prosecuted the criminal cases on behalf of the government and Assistant U.S. Attorney Colin J. Callahan litigated the civil cases on behalf of the Affirmative Civil Enforcement Section of the United States Attorney’s Office.
The civil cases resolved by this settlement are captioned United States ex rel. Darla Reid v. Med-Fast Pharmacy, Inc., Civil Action No. 13-715 (WDPA); and United States ex rel. Bryan Bisceglia v. Med-Fast Pharmacy, Inc. et al., Civil Action No. 13-0368 (WDPA). The claims resolved by the civil settlement are allegations only, and there has been no determination of liability. The conspiracy charge against 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. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Outcome: The court sentenced Defendant to pay $400,000 in forfeiture, $44,600 in a criminal fine and a $400 special assessment. Iserve was also ordered by the court to pay to the United States $1,555,000.