You are here

Justice News

Department of Justice
U.S. Attorney’s Office
Western District of Kentucky

Wednesday, July 24, 2013

Former Owner Of Louisville Pharmaceutical Company Pleads Guilty To FDA Violations

– Company received more than $2 million in payments from Medicare for misbranded, adulterated and contaminated inhalation medications

LOUISVILLE, Ky. – The former owner of National Respiratory Services, LLC (NRS) and a former minority shareholder have pleaded guilty, in United States District Court, before Magistrate Judge James D. Moyer, to charges of misbranding and altering drugs and the company admitted to committing health care fraud, announced David J. Hale, United States Attorney for the Western District of Kentucky.

Christopher Keegan, age 55, of Lexington, Kentucky, the former owner of NRS, pleaded guilty yesterday to count two, of a federal Information and agreed to a restitution payment of $2,030,343.11, to the Centers for Medicare and Medicaid Services, jointly and severally with co-defendants.

According to the plea agreement, while owner and majority shareholder of NRS, Keegan and others, through NRS, caused compounded medications to be sent to patients, through interstate commerce, which were sub-potent, super-potent, non-sterile, and therefore adulterated and misbranded in violation of the Food Drug & Cosmetic Act. Further, Keegan and others, through NRS, then submitted to Medicare, false and fraudulent billings which indicated that the medications they were providing to patients were non-compounded and FDA-approved when they were not. The total loss of this activity is $2,030,343.11. Compounded medications are not FDA approved, but FDA regulations permit pharmacists to make compounded drugs, including prescription drugs, in limited amounts and under narrow circumstances, for particular patients, and at the direction of a physician when other available drugs cannot be prescribed.

Also, co-defendant James Rives, age 71, of Louisville, Kentucky, a former minority shareholder of NRS, pleaded guilty yesterday to count two of the federal Information and agreed to a restitution payment of $75,996.85. As a result of the plea agreement, the United States will not pursue felony charges of conspiracy to commit health care fraud against Rives for the activity he engaged in during the period of 2006 through 2008 while defendant Rives was associated with NRS.

At sentencing the defendants face a maximum term of one year in prison, a fine, restitution, and a period of supervised release.

In separate Indictments, Johnny Perry, of Mt. Washington, Kentucky, and the former vice-president of NRS, was charged on August 3, 2011, and pleaded guilty to a five count felony Indictment. Perry admitted that between June of 2006 and June of 2008, as vice-president of NRS, she provided compounded medications to patients, but led both Medicare and the patients’ doctors to believe that the pharmaceutical company was providing non-compounded medications. Also, Perry admitted to submitting false and fraudulent claims to Medicare for the cost of FDA-approved, commercially manufactured, prescription inhalation drugs, when they were not. Sentencing is scheduled for August 5, 2013, at 11:00 AM in Louisville, before Chief Judge Joseph H. McKinley Jr.

Former NRS pharmacists Leo Parrino and Linda Schmidt, pleaded guilty to introducing compounded inhalation drugs that bore false and misleading labelling and represented them to be of greater strength and potency than they actually had. Parrino pleaded guilty to the charge on September 8, 2011 and was sentenced by Magistrate Judge Moyer to one year probation and restitution in the amount of $14,098.24 and Schmidt was sentenced to one year probation and restitution in the amount of $20,000.00.

The case is being prosecuted by Assistant United States Attorney Lettricea Jefferson-Webb and it was investigated by the Food and Drug Administration Office of Criminal Investigations, Health and Human Services Office of Inspector General, United States Postal Inspection Service, and the Federal Bureau of Investigation.

Updated December 15, 2014