Southern Colorado Hospital and Doctors Agree to Pay $650,000 to Resolve Allegations That They Unlawfully Prescribed Opioids and Other Controlled Substances

DENVER—The United States Attorney’s Office for the District of Colorado announced that Mt. San Rafael Hospital and Rural Health Clinic (“Mt. San Rafael Hospital”) in Trinidad, Colorado, and three physicians employed by the hospital—Dr. Sheryll Castro-Flores, Dr. Joseph Jimenez, and Dr. Douglas McFarland—have agreed to pay a combined $650,000 to resolve allegations that they violated the Controlled Substances Act by unlawfully dispensing controlled substances, including high doses of opioids and dangerous drug combinations, and violated the False Claims Act by seeking payment for many of those invalid prescriptions from Medicare and other federal health care programs.

The United States alleges that, between January 2016 and December 2023, Castro-Flores, Jimenez, and McFarland violated the Controlled Substances Act and the False Claims Act by repeatedly issuing invalid prescriptions for controlled substances, including opioids. According to the allegations, these prescriptions were not issued for a legitimate medical purpose or were outside the usual course of professional practice.

The United States further alleges that the physicians ignored numerous “red flags” indicating the prescriptions were improper or unsafe, including high daily opioid doses, dangerous drug combinations, signs of substance abuse, prolonged opioid use, cash payments despite insurance coverage, long-distance travel to obtain prescriptions, and repeated early refill requests.

These doctors were employed by Mt. San Rafael Hospital, which, the United States alleges, is also liable under the Controlled Substances Act for the illegal prescribing of its employees, and under the False Claims Act for causing claims for payment for these invalid prescriptions to be submitted to the government.

To resolve the allegations, the doctors and hospital have agreed to pay a combination of penalties under the Controlled Substances Act and damages under the False Claims Act as follows:

• Dr. Castro-Flores has agreed to pay $112,500;
• Dr. Jimenez has agreed to pay $112,500;
• Dr. MacFarland has agreed to pay $100,000; and
• Mt. San Rafael Hospital has agreed to pay $325,000.

The hospital has also issued new policies and implemented new protocols, applicable to all its employees, to disallow opioids prescribing for chronic pain management and to ensure that opioids prescribing for acute and sub-acute pain is done safely and meets state guidelines.

“Doctors and the hospitals who employ them must prescribe controlled substances carefully to protect patients and the community from the dangers of overprescribing,” said United States Attorney Peter McNeilly. “When doctors write prescriptions for opioids despite red flags signaling that the prescriptions may be invalid, they place the patient at risk of harm and they increase the likelihood of illegal diversion. And, when doctors cause illegitimate prescriptions to be submitted to Medicare and other federal healthcare plans, taxpayers pay for those illegitimate prescriptions. We will continue to hold doctors and hospitals accountable when they disregard these important obligations.”

“DEA will continue to relentlessly pursue hospitals and practitioners who engage in egregious prescribing practices jeopardizing the health and safety of patients and the community,” said DEA Rocky Mountain Field Division Diversion Program Manager George Taylor. “DEA, alongside federal and state partners, will not tolerate those that violate the trust of patients and will hold those parties accountable.”

“Physicians who recklessly, illegitimately distribute controlled substances undermine ongoing public health efforts to address the opioid crisis and betray their professional responsibility to serve the health and well-being of the public,” said Special Agent in Charge Linda T. Hanley of Health and Human Services Office of Inspector General (HHS-OIG). “Working closely with our law enforcement partners, HHS-OIG will continue to investigate such allegations to safeguard our health care system’s integrity as well as patient safety.”

The claims against Dr. Castro-Flores, Dr. Jimenez, Dr. McFarland, and Mt. San Rafael are allegations, and in agreeing to settle this matter, they did not admit to any liability.

This matter was investigated by the DEA’s Rocky Mountain Division, and the Department of Health and Human Services, Office of Inspector General. The United States was represented by Assistant United States Attorney Jacob Licht.