A pharmacy chain has agreed to pay nearly $2.7 million to settle federal claims that it illegally recycled unused nursing home medications and overcharged government insurance programs for diabetic test strips, federal prosecutors in Pittsburgh said Wednesday.
The settlement concerns Aliquippa-based Med-Fast Pharmacy and its in-house subsidiary, Iserve Technologies, which operates retail pharmacies, a mail-order prescription service and drug deliveries to nursing homes and other agencies throughout western Pennsylvania.
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Two former Med-Fast employees also have been charged in the scheme.
Correna Pfeiffer, 37, of Monaca, managed Med-Fast's Institutional Pharmacy and pleaded guilty to conspiracy in October 2015. She faces up to five years in prison when she's sentenced Oct. 17.
Gino Cordisco, 47, of Mars, was charged with conspiracy in a criminal information last week. The former vice president of store operations for Med-Fast is accused of participating in the same conspiracy as Pfeiffer.
Unused prescription drugs are supposed to be destroyed, but Med-Fast drivers would pick up unused drugs from nursing homes after patients died or otherwise no longer needed the drugs, so they could be recycled to fill future prescriptions, prosecutors said. As a result the older, unused drugs were commingled and relabeled with newer drugs, in violation of federal law, prosecutors said.
Despite that, no patients were harmed and all of the patients served by Med-Fast, and Iserve got the drugs they were supposed to receive, prosecutors and a spokeswoman for the companies said Wednesday.
Iserve also was charged with conspiracy and could be placed on probation. The filing of criminal informations against Cordisco and Iserve is a way to avoid the grand jury process and nearly always signals the defendant's intent to plead guilty. Online federal court records don't list an attorney for Cordisco, and Pfeiffer's attorney didn't immediately return a call for comment.
Elisabeth Mistretta, a spokeswoman for Med-Fast and Iserve, said the practices that led to the criminal charges "were rectified, and the individuals primarily responsible for this conduct are no longer with the company," referring to Pfeiffer and Cordisco.
"Since then, our family-owned pharmacies have focused on expanding methods to ensure quality and compliance," Mistretta said in a statement.
The criminal investigations grew out of a pair of whistleblower lawsuits filed by two other employees in 2013. The government intervened in the lawsuits because they involved federal drug labeling and Medicare billing regulations.
In one lawsuit, a Med-Fast employee claimed she was told to falsify records, including expiration dates of drugs that were recycled, and that company officials "recklessly and deliberately disregarded" her complaints. The other suit was filed by Med-Fast's former director marketing and sales and alleged he had access to records showing the pharmacy was overcharging Medicare and Medicaid for the diabetes testing strips.
The $2.66 million settlement resolves those lawsuits. Med-Fast isn't acknowledging liability as part of the civil settlement.