The nation’s second-largest nursing home pharmacy, PharMerica Corp., has agreed to pay $9.25 million to resolve allegations that it received kickbacks from pharmaceutical manufacturer Abbott Laboratories, authorities announced today.
The kickbacks were paid for promoting the prescription drug Depakote for nursing home patients.
PharMerica is headquartered in Louisville, Kentucky, officials said.
“Elderly nursing home residents suffering from dementia have little control over the medications they receive and depend on the unbiased judgment of healthcare professionals for their daily care,” said Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.
Adding “Kickbacks to entities making drug recommendations compromise their independence and undermine their role in protecting nursing home residents from the use of unnecessary drugs.”
The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery, authorities said.
The whistleblower in this case will receive $1 million as her share of the settlement.
Officials said nursing homes rely on consultant pharmacists, such as those employed by PharMerica, to review their residents’ medical charts at least monthly and make recommendations to their physicians about what drugs should be prescribed for those residents.
The settlement announced today resolves allegations that in exchange for recommending that physicians prescribe Depakote, an anti-epileptic drug manufactured by Abbott, to nursing home residents, PharMerica solicited and received kickbacks from Abbott.
The government alleges that the kickbacks were disguised as rebates, educational grants and other financial support, according to authorities.
In May 2012, officials said the United States, numerous states and Abbott entered into a $1.5 billion global civil and criminal resolution that, among other things, resolved Abbott’s liability under the False Claims Act for alleged kickbacks to nursing home pharmacies, including PharMerica.
The settlement announced today resolves PharMerica’s role in that alleged kickback scheme.
“The settlement announced today should serve as a stark reminder to pharmaceutical companies and those with whom they do business that the Department of Justice and its investigative agencies will continue to monitor their activities,” said U.S. Attorney Anthony P. Giorno of the Western District of Virginia. “When those activities involve improprieties such as the payment of kickbacks, we will not hesitate to hold them accountable. We owe nothing less in fulfilling our duty to ensure that nursing home residents are provided with the appropriate drugs based upon their needs rather than the business interests of the companies providing the drugs.”
About $7.6 million of the settlement will go to the United States, while $2.5 million has been allocated to cover Medicaid program claims by states that elect to participate in the settlement, officials said.
The Medicaid program is jointly funded by the federal and state governments.
“Nursing home pharmacies accepting kickbacks from drug makers in exchange for prescribing certain prescription drugs puts vulnerable residents at risk for receiving unnecessary medications, corrupts medical decision making, and inflates health care costs,” said Special Agent in Charge Nick DiGiulio of the U.S. Department of Health and Human Services’ Office of Inspector General. “Our agency will continue to root out such corrosive practices from our health care system.”
The settlement partially resolves allegations in two lawsuits filed in federal court in Virginia by Richard Spetter and Meredith McCoyd, former Abbott employees.
McCoyd will receive $1 million from the federal share of the settlement amount.
The leader of an international money laundering organization is facing charges alleging that he moved millions of dollars in drug money for organizations that included the Sinaloa Cartel, federal officials announced Friday.
Gurkaran Singh Isshpunani was arrested on September 14 in Buffalo, New York as he attempted to enter the U.S. from Canada.
A federal magistrate ordered Isshpunani held without bond and transported to Los Angeles, where he arrived Thursday.
Isshpunani is the lead defendant in a grand jury indictment that charges 22 defendants with money laundering and operating unlicensed money remitting businesses violations.
The illegal scheme allegedly spanned the world and involved operatives in Canada, India, the United States and Mexico who laundered drug trafficking proceeds generated from multi-kilogram and multi-pound sales of narcotics in Canada and the United States .
The illegal scheme was done on behalf of the Sinaloa Cartel and their affiliated drug trafficking organizations.
The laundered money is alleged to have either been transported to the Sinaloa Cartel as profits or reinvested in additional narcotics to be sold and distributed in the United States and Canada, according to authorities.
The indictment accuses Isshpunani of being the leader of an international “hawala” ring that transferred narcotics proceeds for the Sinaloa drug cartel and other drug trafficking organizations.
Isshpunani, 34, is believed to reside in the Canadian province of Ontario.
A three-count indictment that charges him and 21 other defendants with conspiracy to launder money, conspiracy to operate an unlicensed money transmitting business (a hawala), and a substantive count of operating an unlicensed money transmitting business.
Previously in this case, 14 other defendants have been arrested and arraigned. The indictment charges seven defendants who are currently fugitives.
The indictment specifically alleges that the hawala network transferred more than $4.5 million in narcotics proceeds.
It was involved in the trafficking of 29 kilograms of cocaine and approximately 90 pounds of methamphetamine.
However, officials said during the course of a four-year federal wiretap investigation by the Drug Enforcement Administration’s LA Strike Force and IRS – Criminal Investigation, authorities seized a total of $15,467,293 in bulk U.S. currency.
Also seized was 321 kilograms of cocaine, 98 pounds of methamphetamine, 11 kilograms of MDMA (“ecstasy”) and nine kilograms of heroin, according to authorities.
Isshpunani and the others are charged in a 36-page indictment that outlines the workings of a “hawala,” which is an alternative form or method of money remittance which operates outside of traditional banking or financial systems.
Through hawala transactions, only the value of the money is transferred, not the money itself. The hawala system transfers money via a network of brokers known as “hawaladars.”
According to the indictment, Isshpunani is a hawaladar who is a part of a network of Indian men who move money based on a trust system.
The indictment explains that, in its most basic form, a hawala needs at least two brokers who are typically located in separate countries (but can be located in different cities within one country).
The transfer of monetary value occurs between the brokers based solely upon the trust that exists between the brokers.
Thus, there are no promissory instruments or any legally binding features of the hawala system. The necessary trust and long-established connections between brokers are typically based on familial, ethnic, religious, regional and/or cultural grounds.
Often, a given hawala network consists of many brokers operating in multiple countries around the world in which all brokers are in contact with each other and money movements can occur in a variety of directions from one country to another.
“Drug traffickers in Canada would generate drug proceeds from multi-kilogram and multi-pound sales and distributions of drugs provided by Mexican cartels, including the Sinaloa Cartel,” the indictment alleges.
The Canadian-based drug traffickers coordinated money transfers to their counterparts in Mexico by instructing Isshpunani and other alleged hawaladars in Canada to deliver specified amounts of money to couriers in the U.S. who were working on behalf of the cartels.
The Canadian-based hawaladars, once in possession of the drug traffickers’ bulk Canadian currency, would contact U.S.-based hawaladars and authorize the release of the equivalent amounts of U.S. currency to the couriers operating in the Los Angeles area.
A number of co-defendants named in the indictment served as U.S.-based couriers, picking up and subsequently delivering bulk U.S. currency in the Los Angeles area in exchange for narcotics that were to be transported back to Canada for sales and distribution.
The indictment in this case was returned under seal by a federal grand jury in Los Angeles in November 2014.
Authorities began arresting defendants in Canada several months ago. In addition to Isshpunani, 14 defendants have been taken into custody and have been arraigned in Los Angeles.
Those previously arrested, and who have pleaded not guilty, are:
- Miguel Melendrez Gastelum, 35, of Coachella, California, who surrendered to federal authorities on Sept. 16
- Shannon Aubut, 30, a resident of the province of Ontario, who was arrested on Aug. 14 at the Camplain, New York Port of Entry
- Paul Alan Jacobs, 42, of Venice, California, who surrendered to authorities on Aug. 13
- Jose De Jesus Montenegro, 49, of Coachella, who was arrested at the Tecate, California Port of Entry
- Breidi Alberto Espinoza, 28, of Corona, California, who was arrested on July 10 at the Otay Mesa Port of Entry
- Alberto Diaz, 28, of San Diego, who was arrested on July 4 at the San Ysidro Port of Entry
- Christopher Fagon, 37, a resident of the province of Ontario, who was arrested on June 28 at Los Angeles International Airport
- Jose Luis Barraza, 47, of Coachella, who was arrested on June 27 at Calexico Port of Entry
- Bradley John Martin, 54, of Carlsbad, California, who was arrested on June 12 at San Ysidro Port of Entry
- Ramesh Singh, 46, of Alhambra, California, who surrendered to authorities on June 2
- Sanjeev Wadhwa, 36, an Indian national, who was arrested on May 30 at LAX
- Sucha Singh, 51, of Arleta, California, who was arrested at his residence on May 30
- Harinder Singh, 30, of Monrovia, California, who was arrested on May 30
- Harmeet Singh, 54, of Chino Hills, California, who was arrested at his residence on May 30.
A trial date for the defendants who have been arraigned in Los Angeles has been scheduled for May 24.
Defendants are presumed innocent until proven guilty.
The money laundering conspiracy charge carries prison sentence of up to 20 years behind bars. Each of the two counts related to the alleged unlicensed money transmitting business carries a sentence of up to five years.
The seven fugitives named in the indictment are:
Sanjeev Bhola, of India;
Balwat Bhola, of India;
Bakshish Sidhu, of India;
Jason Robert Carey, 37, a resident of the province of Ontario
Jesus Manuel Perez Rios, 33, of Coachella, who authorities believe fled to Mexico
Tina Pham, 25, of Montreal a Canadian man known only as “Buddy.”
Isshpunani was apprehended last month by U.S. Customs and Border Patrol while attempting to enter the United States from Canada at the Buffalo, New York Port of Entry.
Officials said representatives of the two sides held two separate but related meetings to exchange law enforcement information, share their assessments of the drug problem, discuss responses in their respective countries, review progress and examine possible mechanisms for further cooperation.
In doing so, the two countries expanded their understanding of the differences in their legal systems, investigative practices and national situations, according to authorities.
The Bilateral Drug Intelligence Working Group, led by officials from the U.S. Drug Enforcement Administration and the Chinese Ministry of Public Security, met this week.
Primarily an exchange mechanism for law enforcement information, the Bilateral Drug Intelligence Working Group conducted briefings on the major drug issues faced by each country.
The Counternarcotics Working Group, led by the Department of Justice and Chinese Ministry of Public Security, also met last week.
This group, which reports to the Joint Liaison Group on law enforcement cooperation, focuses on expanding mutual understanding and cooperation on drug issues, officials said.
In this meeting, among other issues, the sides discussed the legal and regulatory challenges posed by “designer drugs” – also known as new psychoactive substances – as well as potential avenues for cooperation in investigating and combating this emerging threat, officials said.
The Indictment, returned by a federal grand jury last week, charges Dr. Richard Johns, 49, of Little Rock, and 18 others operated the pharmaceutical drug activity in Lonoke, White, and Pulaski Counties.
Johns was charged in Lonoke County on May 18 with similar offenses.
On May 18, the Lonoke County Sheriff’s Office took Dr. Johns into custody charging him with 187 counts of Fraudulent Practices, a class C state felony.
This investigation first began November 2014 when detectives responded to an overdose death of an individual in Cabot.
The Sheriff’s Office got help from the DEA and began a joint investigation into the doctor and the suspected criminal enterprise headed by Dr. Johns, according to officials.
The investigation determined that 187 fraudulent prescriptions had been filled and distributed since July 2014 within the illicit market in Lonoke County alone, officials said.
The prescriptions totaled approximately 16,830 oxycodone pills with a street value of $505,000.
In May 2015, DEA, as part of Operation Pilluted, announced the return of two indictments charging 46 defendants, including physicians, pharmacists, and nurses, with the illicit distribution of pharmaceuticals in the Central Arkansas area.
In total, Operation Pilluted in Arkansas has led to six federal indictments charging 113 defendants, including five doctors.
During the course of the ongoing investigation, officials state DEA determined that Dr. Johns was part of a distribution network spanning other counties in which he would write oxycodone prescriptions in individuals’ names, selling them for $500 each.
Co-conspirators would bring names and dates of birth to Dr. Johns with the intent of buying a prescription for oxycodone.
Dr. Johns would issue the prescription without examining the individual, and in many cases, without ever having met the individual. Prescriptions were filled at local pharmacies, and the oxycodone tablets sold in the community for $30 each, according to authorities.
Several co-conspirators acknowledged purchasing such fraudulent prescriptions from Dr. Johns since 2011.
“As alleged in the indictment, the doctor writing these fraudulent prescriptions is no different than a common, street-level drug dealer on the street, and should be treated as such,” said Christopher R. Thyer, U.S.attorney in Arkansas.
Adding, “As a society we have granted certain health care professionals the right to prescribe and use highly addictive drugs to treat their patients. When that right is abused, we will aggressively pursue those health care professionals as the criminals that they are. I am pleased that this doctor and his network have been stopped, and this office will continue to target the doctors, pharmacists, and other health-care providers who illegally allow these dangerous and highly addictive drugs to end up on our streets.”
In January 2014, as part of a national effort, the DEA New Orleans Field Division, which includes the DEA Little Rock office, launched an aggressive campaign that targeted the largest sources of illegally diverted pharmaceuticals in Arkansas, Louisiana, Mississippi, and Alabama.
This effort, dubbed Operation Pilluted, involved the extensive investigation of rogue practitioners, pharmacists, and other DEA Registrants, as well as the aggressive pursuit of more traditional criminal organizations involved in the distribution of pharmaceuticals.
Under the auspices of Operation Pilluted, concerted efforts were initiated to heighten community awareness concerning the perils of prescription drug diversion and the strategic implementation/strengthening of associated diverted pharmaceutical laws.
(May 2015 TV News Report)
An indictment contains only allegations. A defendant is presumed innocent unless and until proven guilty.
Conspiracy to Distribute Schedule II controlled substances
RICHARD DUANE JOHNS, 49, Little Rock
DAVID LARU.S.ROGGINS, 56, Cabot
MARISSA DONANN SCROGGINS, 29, Cabot
CHRISTOPHER DAVID SCROGGINS, 36, Cabot
DONNA MICHELLE CEARNS, 28 Cabot
VANESSA E. BYRD, 29, Ward
RANDY JAMES BYRD, 28, Ward
JAMES JASON WASHAM, 38, Scott
JERRI D. WASHAM, 33, Scott
CHRISTINE MARIE ZEMAN, 46, Lonoke
MEGAN BROOKE MCCONNELL, 25, Judsonia
GREGORY CHASE MCCONNELL, 24, Judsonia
ARON SCOT COCHRAN, 26, Searcy
SCOTTY WAYNE FERREN, JR., 25, Searcy
JASON RAY BEAUDRY, 29, Searcy
DUSTIN R. BULLOCK, 27, Searcy
CHARLES LESTER MASON, 69, Searcy
JOSHUA DAVID RINGER, 29, Searcy
JAMES VERNON SPIKER, JR., 28, Judsonia