Med-Fast Pharmacy Inc. and Former Exec Agree to Resolve Criminal and Civil Charges

PITTSBURGH – Individuals and entities associated with Med-Fast Pharmacy, Inc. (“Med-Fast”) have agreed to resolve criminal and civil charges associated with Med-Fast’s improper submission of claims to the Medicare and Medicaid programs, Acting United States Attorney Soo C. Song announced today.

As part of this global resolution, the former Vice President of Store Operations for Med-Fast, defendant Gino Cordisco, 47, of Mars, Pennsylvania, has been charged with one count of conspiracy related to his participation in a scheme to fill prescriptions for nursing homes with recycled unused drugs that were commingled with drug stocks on hand at Med-Fast’s Institutional Pharmacy. Defendant Iserve Technologies, Inc., which is co-located with and operated out of Med-Fast, participated in the same scheme, and was similarly charged with conspiracy. These criminal charges follow the earlier guilty plea on related charges of Correna Pfeiffer, 37, of Monaca, Pennsylvania, who previously served as the manager of the Med-Fast Institutional Pharmacy.

Med-Fast Pharmacy, Inc., its owner Douglas Kaleugher, and related entities also have agreed to pay the United States $2,666,300.00 to settle civil False Claims Act allegations. The civil settlement resolves allegations in two separate whistleblower lawsuits filed in federal court in Pittsburgh, Pennsylvania. The settled claims contended that Med-Fast violated the False Claims Act by distributing and submitting claims to Medicare for medication that it had either recycled from long-term care facilities serviced by its institutional pharmacy, or that otherwise differed from the medications identified as part of the claims submitted to the United States. The settlement also resolves allegations that Med-Fast violated the False Claims Act by submitting claims to Medicare and Pennsylvania Medicaid that sought reimbursement for the retail-packaged version of diabetes testing strips, while actually supplying patients with cheaper mail-order-packaged version of the same strips.

“These criminal and civil agreements demonstrate our commitment to safeguarding the integrity of federal health care programs and the safety and well-being of the public,” said Acting U.S. Attorney Song. “Pharmacists and pharmacies must deal fairly and honestly with federal health care programs, and this U.S. Attorney’s Office will hold accountable those who do not.”

These matters were investigated by The U.S. Food and Drug Administration-OCI, the Drug Enforcement Administration-Diversion Investigators, the Office of Inspector General of the Department of Health and Human Services and the Federal Bureau of Investigation. Assistant U.S. Attorney Nelson P. Cohen prosecuted the criminal cases on behalf of the government and Assistant U.S. Attorney Colin J. Callahan litigated the civil cases on behalf of the Affirmative Civil Enforcement Section of the United States Attorney’s Office.

The civil cases resolved by this settlement are captioned United States ex rel. Darla Reid v. Med-Fast Pharmacy, Inc., Civil Action No. 13-715 (WDPA); and United States ex rel. Bryan Bisceglia v. Med-Fast Pharmacy, Inc. et al., Civil Action No. 13-0368 (WDPA). The claims resolved by the civil settlement are allegations only, and there has been no determination of liability. The conspiracy charge against Cordisco carries a maximum total sentence of 5 years in prison, a fine of $250,000 or both. The conspiracy charge against Iserve Technologies, Inc. carries a maximum total sentence of 5 years probation, a fine of $500,000 or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.