Med-Fast Settles Civil Case Over Selling Reused Medications To Nursing Homes

The U.S. Department of Justice (DOJ) announced a global resolution in the case against individuals and entities associated with Med-Fast Pharmacy, Inc. (Med-Fast) for improper submission of claims to the Medicare and Medicaid programs.  Med-Fast, its owner Douglas Kaleugher, and related entities also agreed to pay the U.S. over $2.6 million to settle civil False Claims Act allegations that stemmed from two separate whistleblower lawsuits.

The settled claims asserted that Med-Fast violated the False Claims Act when they distributed medications recycled from long-term care facilities serviced by its institutional pharmacy and submitted claims to Medicare that differed from the medications identified in the claims. The settlement resolves a second allegation of violating the False Claims Act by Medicare and Pennsylvania Medicaid for supplying patients with cheaper mail-order packaged diabetes testing strips instead of the retail-packaged version.

As a result of the global resolution, defendant Gino Cordisco, the former Vice President of Store Operations for Med-Fast, received a charge of one count conspiracy related to his participation in the scheme to used recycled drugs that were commingled with drug stocks at Med-Fast’s Institutional Pharmacy to fill prescriptions for nursing homes. Defendant Iserve Technologies, Inc., allegedly participated in the scheme and received the same one count charge.

According to the Pittsburgh Post-Gazette, both of these charges follow the guilty plea from Correna Pfeiffer, who in her role the manager of the Med-Fast Institutional Pharmacy from 2009 – 2013 supervised the employees as they prepared prescription drugs for delivery to residents at nursing homes. Med-Fast drivers picked up any unused medications from nursing homes and returned them to the pharmacy operation in Aliquippa. Once there, employees removed the drugs from their packages and returned them to stock to be reused in future prescriptions. This resulted in drugs from different makers and with different expiration dates being mixed in stock bottles. The U.S. Drug Enforcement Agency (DEA) and the U.S. Food and Drug Administration (FDA) contend that employees were instructed to use fake labels and send medications out for resale to other nursing homes.

FDA’s Office of Criminal Investigations, DEA’s Diversion Investigators, the Office of Inspector General of the Department of Health and Human Services and the Federal Bureau of Investigation all participated in the investigation. Assistant U.S. Attorney Nelson P. Cohen prosecuted the criminal case and Assistant U.S. Attorney Colin J. Callahan litigated the civil cases.