Food and Drug Administration
Office of Criminal Investigations
U.S. Department of Justice Press Release
For Immediate Release
October 18, 2013
United States Attorney
Western District of Kentucky
Contact: Stephanie Collins
Company received more than $2 million in payments from Medicare for misbranded, adulterated and contaminated inhalation medications
LOUISVILLE, KY - National Respiratory Services, LLC (NRS) was sentenced to a fine of $2 million by United States Judge, Charles R. Simpson, III, for committing health care fraud announced David J. Hale, United States Attorney for the Western District of Kentucky.
According to the plea agreement, between June of 2006 and June of 2008, Christopher Keegan, while owner and majority shareholder of NRS, along with Johnny Perry, who was vice-president of NRS and others caused compounded medications to be sent to patients, through interstate commerce, which were sub-potent, super-potent, non-sterile, and therefore adulterated and misbranded in violation of the Food Drug & Cosmetic Act. NRS provided compounded medications to patients, but led both Medicare and the patients' doctors to believe that the pharmaceutical company was providing non-compounded medications (FDA approved-commercially manufactured).
It is further alleged that the drugs provided by NRS were misbranded inhalation drugs in that they contained false and misleading labeling that misrepresented the strength and potency of their active ingredients or the type of drug actually provided. Further, NRS Corporation through Keegan, Perry and others, then submitted to Medicare, false and fraudulent billings which indicated that the medications they were providing to patients were non-compounded and FDA-approved when they were not. The total loss of this activity is $2,030,343.11.
Compounded medications are not FDA approved, but FDA regulations permit pharmacists to make compounded drugs, including prescription drugs, in limited amounts and under narrow circumstances, for particular patients, and at the direction of a physician when other available drugs cannot be prescribed.
Former NRS pharmacists Leo Parrino and Linda Schmidt, pleaded guilty to introducing compounded inhalation drugs that bore false and misleading labelling and represented them to be of greater strength and potency than they actually were. Parrino pleaded guilty to the charge on September 8, 2011 and was sentenced by Magistrate Judge James D. Moyer to one year probation and restitution in the amount of $14,098.24 and Schmidt was sentenced to one year probation and restitution in the amount of $20,000.00.
Also, co-defendant James Rives, a former minority shareholder of NRS, pleaded guilty to a federal misdemeanor Information and agreed to a restitution payment of $75,996.85. As a result of the plea agreement, the United States will not pursue felony charges of conspiracy to commit health care fraud against Rives for the activity he engaged in during the period of 2006 through 2008 while defendant Rives was associated with NRS.
Christopher Keegan, pleaded guilty to a federal misdemeanor Information and agreed to a restitution payment of $2,030,343.11, to the Centers for Medicare and Medicaid Services, jointly and severally with co-defendants.
Johnny Perry pleaded guilty to four counts of an Indictment and received a sentence of three years probation with 8 months home incarceration. Perry was ordered to pay restitution of $2,030,343.11, to the Centers for Medicare and Medicaid Services, jointly and severally with co-defendants.
The case was prosecuted by Assistant United States Attorney Lettricea Jefferson-Webb, and investigated by the Food and Drug Administration Office of Criminal Investigation, Health and Human Services Office of Inspector General, United States Postal Inspection Service, and the Federal Bureau of Investigation.