CEO of Kentwood Pharmacy Sentenced to 10 Years in Prison for Health Care Fraud
GRAND RAPIDS, MI—U.S. Attorney Patrick A. Miles, Jr. announced that Kim Duron Mulder, 56, formerly of East Grand Rapids, was sentenced today to ten years in prison. Mulder, the CEO of Kentwood Pharmacy, pled guilty to a conspiracy to commit health care fraud based on billing Medicare Part D Plans, Medicaid, and private insurance plans for misbranded and adulterated drugs. At a sentencing hearing in Grand Rapids, Chief U.S. District Judge Robert Jonker also ordered that Mulder serve three years of supervised release following his prison term.
Following the execution of federal search warrants on November 2, 2010 and the execution of an Immediate Suspension Order by the DEA, Kentwood Pharmacy ceased operations. As a result of the subsequent investigation, a total of 18 employees at Kentwood Pharmacy were convicted of criminal offenses stemming from the practices at Kentwood Pharmacy, including the felony convictions of six licensed pharmacists. The sentences for these defendants included 14 years in prison for Richard Clarke, formerly Kentwood Pharmacy’s Vice President of Sales, for his involvement in the health care fraud conspiracy and a separate charge of possession of child pornography. Judge Jonker also sentenced chief pharmacist Lawrence Harden to six years’ imprisonment for his role in the conspiracy.
The process by which Kentwood Pharmacy returned drugs to pharmacy stock resulted in the cross-contamination of drugs, improper labeling of drugs, the placement of different drug dosages into stock bottles, and the placement of the altogether wrong drugs into stock bottles. These practices also allowed Vice President Richard Clarke to remove returned controlled substances from the pharmacy, including Vicodin and OxyContin, and sell the drugs on the street in northern Michigan.
Judge Jonker found that public and private insurers paid more $79,000,000.00 for adulterated and misbranded drugs that were sent to patients at more than 800 nursing and adult foster care homes serviced by Kentwood Pharmacy from 2006 to 2010. Based on the licensing of Kentwood Pharmacy in the name of Mr. Mulder’s wife, who had nothing to do with running the pharmacy, Judge Jonker found that the business was “conceived in fraud” and, given Mulder’s felony convictions, “should never have received a [pharmacy] license.” Judge Jonker commented that Mulder “created a culture of chaos” that “created real dangers associated” with cross-contamination and generally taking controlled substances out of the traceable regulatory schemes. Judge Jonker concluded that “this was fraud, pure and simple, from the top” and “perpetrated by a person with a history of fraud.”
U.S. Attorney Patrick Miles said, “The public must be able to rely on those who own and run pharmacies to operate in compliance with the federal and state laws regulating the handling, packaging, and distribution of drugs. When health care providers violate regulations meant to protect the public and then bill public and private health care insurers for such drugs, my office will pursue serious charges, including health care fraud.”
“A key element of FDA’s mission to protect the public’s health is to ensure that safe and effective prescription drugs are properly distributed and accounted for via the supply chain and dispensed to the ultimate consumer. The sentence imposed today reflects the seriousness of the harm that could have been inflicted on innocent victims by the defendant’s criminal acts,” said Special Agent in Charge John J. Redmond of the FDA’s Office of Criminal Investigations, Chicago Field Office. “We will continue to pursue and bring to justice those who would put the public’s health at risk by compromising the prescription drug supply chain.”
“This sentence reflects the seriousness of the crimes committed by Mr. Mulder and should serve as a significant deterrence to those who may be contemplating the execution of similar healthcare fraud schemes”, said Lamont Pugh III, Special Agent in Charge of the U.S. Department of Health & Human Services, Office of Inspector General—Chicago Region. “The OIG will continue to work diligently with our law enforcement partners to root out those who would put the public’s health and safety at risk through the commission of healthcare fraud and ensure that they are held accountable.”
The investigation of this matter involved the FDA, HHS-OIG, FBI, DEA, IRS, the Michigan Attorney General’s Office and the Michigan State Police. Assistant U.S. Attorneys Ray Beckering and Adam Townshend prosecuted the case on behalf of the United States.
The investigation of this case was initiated by confidential tips. If Michigan residents or medical professionals suspect possible violations of law or other dangerous practices involving pharmacies or prescription drugs, they can contact the FDA athttp://www.fda.gov/ICECI/criminalInvestigations/default.htm. To report health care fraud generally, persons can contact 1-800-HHS-TIPS.