US Attorney for the Western District of Michigan Mark Totten announced on February 7, 2024, that a Selinsgrove, Pennsylvania, man was sentenced to 78 months in prison for his role in a multi-year conspiracy to traffic stolen diabetic test strips from a Michigan Veterans Affairs (VA) medical center.
In June 2023, a jury found the defendant guilty of all twelve charges against him following a three-day trial. In total, he trafficked over 7,900 boxes of stolen diabetic test strips worth over $427,795. Two Michigan women (Defendants 2 and 3), who were his co-conspirators, pleaded guilty and were sentenced to prison last year.
The United States expects to receive a total recovery from the defendant of more than $1.6 million. He agreed to pay over $1.2 million to resolve the government’s civil claims arising from his misconduct, and was ordered to pay the full value of the stolen diabetic test strips he trafficked, $427,795.23, as part of his criminal judgment.
Defendant 2 was employed at the Michigan VA medical center pharmacy, where she was responsible for ordering supplies for veterans in need of medical care. Beginning in June 2017, she stole diabetic test strips from pharmacy inventory and arranged to meet Defendant 3 and sell them for cash. Defendant 3 in turn sold and shipped them to Defendant 1 in Pennsylvania. Their scheme unraveled when Defendant 2 was caught stealing in November 2019.
“Stolen medical products can present a health risk to those who buy and use them,” said Special Agent in Charge Ronne G. Malham, FDA Office of Criminal Investigations Chicago Field Office. “[The] FDA will continue to protect the public by investigating and bringing to justice those who compromise the nation’s healthcare programs.”
All three co-conspirators were convicted and agreed to civil penalty settlements under the Strengthening and Focusing Enforcement to Deter Organized Stealing and Enhance Safety Act (the “SAFE DOSES Act”), 18 U.S.C. § 670. Congress passed the SAFE DOSES Act in 2012 to combat the theft of medical products to protect the health and safety of patients. The law includes enhancements for members of the supply chain who knowingly traffic in stolen medical products. Because of his role as a distributor of medical products, Chief Judge Jarbou applied an enhancement to Defendant 1 for his role in the conspiracy.
Compliance Perspective
Issue
The purpose of the SAFE DOSES Act is to combat large-scale theft of pre-retail medical cargo—life-saving drugs that millions of American citizens rely on to cure illness—before they enter the stream of commerce. These thefts put patients at risk that is posed by stolen medical products that are then mishandled, stored improperly, and reintroduced into the supply chain. Prohibited conduct includes (1) stealing a “pre-retail medical product”’ or obtaining it by fraud; (2) falsifying the labeling or shipping of documents of pre-retail medical product; (3) possessing, transporting, or trafficking in a pre-retail product involved in a violation of (1) or (2); (4) fraudulent obtaining an expired or stolen pre-retail medical product; (5) fraudulent selling or distributing an expired or stolen pre-retail medical product; or (6) attempting or conspiring to violate (1) through (5). An aggravated offense occurs where (1) the defendant is an employee or agent of an organization in the supply chain for the pre-retail medical product or (2) the violation involves violence or a deadly weapon, or causes serious bodily injury or death, or in the defendant’s second offense under this section.
Discussion Points
- Review your policies and procedures for operating an effective compliance and ethics program. Also review protocols for investigating complaints about missing items and supplies. Ensure that your policies are reviewed at least annually and updated when new information becomes available.
- Train all staff on your compliance and ethics policies and procedures upon hire and at least annually, including their responsibility to identify and report any concerns of fraud, waste, or abuse of government funds in a timely manner. Train purchasing department personnel to ensure they only purchase supplies from approved vendors. Document that these trainings occurred and file the signed document in each employee’s education file.
- Periodically perform audits to ensure medical supplies are accounted for. Also audit to make sure staff are aware of their responsibility to report compliance and ethics concerns to their supervisor, the compliance and ethics officer, or via the anonymous hotline.
*This news alert has been prepared by Med-Net Concepts, LLC for informational purposes only and is not intended to provide legal advice.*
