Inspections, Compliance, Enforcement, and Criminal Investigations

September 30, 2011: Pine Bluff Doctor Sentenced in Health Care Fraud and Misbranding Case

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Food and Drug Administration
Office of Criminal Investigations

U.S. Department of Justice Press Release


For Immediate Release
September 30, 2011

United States Attorney
Eastern District of Arkansas


Little Rock - Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas and Patrick J. Holland, Special Agent in Charge of the Food and Drug Administration's Office of Criminal Investigations for the Kansas City Field Office, announced Kelly Dean Shrum, age 43, a Doctor of Osteopathic Medicine who practiced as an obstetrician-gynecologist in Pine Bluff, Arkansas in 2008 and 2009 was sentenced by the Honorable James M. Moody to five years probation on each count of his conviction to be served concurrently. He was ordered to serve 200 hours community service each year of his probation. He was also ordered to pay $204,194.49 restitution and to forfeit $75,000 of proceeds from the health care fraud.

Shrum was found guilty by a jury of one count of misdemeanor Misbranding in violation of the Food, Drug, & Cosmetic Act and one count of Health Care Fraud in November of 2010.

"The conviction, and subsequent sentencing of Dr. Shrum, is a significant case in the protection of the taxpayers' health care and their money from health care fraud," stated Thyer. "This office is committed to continuing our relationship with the Food and Drug Administration and Arkansas Attorney General's Office to protect the citizens who put their trust in physicians to provide them with approved drug products."

"Americans must have confidence that their health care providers are receiving and administering drugs that fully comply with U.S. laws," said Holland. "The FDA will aggressively pursue all those who seek to profit from causing the importation and distribution of misbranded foreign drugs."

This investigation began in April of 2009, with an anonymous tip to the Medicaid Fraud Control Unit of the Arkansas Attorney General's Office hotline regarding Shrum's use of an intrauterine device (IUD) that had not been approved by the Food & Drug Administration for distribution in the United States. During the execution of a search warrant at Shrum's former office at the Arkansas Center for Women, LTD in Pine Bluff, Arkansas, federal agents located non-FDA-approved IUDs, which were labeled in Scandinavian and Turkish languages. From January of 2008 through June of 2009, Shrum billed the Arkansas Medicaid Program as if he was providing Medicaid beneficiaries with the FDA-approved, Bayer manufactured IUD, Mirena®, when in fact, he was providing the beneficiaries with a non-FDA approved IUD. In that time period, Arkansas Medicaid paid Shrum over $162,000 on fraudulent claims for Mirena. During the same time frame, Shrum was paid by TRICARE, private insurance companies, and self pay patients, for the non-FDA-approved IUD for an additional $42,000 in fraudulent claims.

This investigation was conducted by agents from the Kansas City Field Office of the FDA Office of Criminal Investigations, in close cooperation with investigators from the Arkansas Medicaid Fraud Control Unit. The case was prosecuted by Assistant United States Attorney Shannon S. Smith, former Assistant United States Attorney Laura Hoey and Special Assistant United States Attorney Jay Shue.


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