Eastern Kentucky Hospital System to Pay U.S. Government $150,000 to Settle Allegations that it Violated the Controlled Substances Act

LEXINGTON, Ky. – Appalachian Regional Healthcare, Inc. (“ARH”) has agreed to pay the United States $150,000, to settle civil allegations that it unlawfully filled fraudulent prescriptions for stimulants and that it failed to make and maintain complete and accurate records of its controlled substances, in violation of the federal Controlled Substances Act.

The settlement resolves a civil lawsuit that was filed by the United States against ARH in May of 2016.  In the lawsuit, the United States alleged that Harlan ARH Hospital Pharmacy knowingly filled fraudulent prescriptions for Schedule IV stimulants.  Specifically, the United States alleged that ARH knew the prescriptions were fraudulent because ARH was aware that no doctor-patient relationship existed between the Harlan ARH Emergency Room physician, who was writing the prescriptions, and the ARH nurses and staff, who were filling the prescriptions at ARH pharmacies.  The lawsuit further alleged that individuals in Harlan ARH’s management were made aware of the improper prescribing in 2010; yet, the Harlan ARH Hospital Pharmacy continued filling those prescriptions until 2014.  The United States alleged that, as a result of these improperly filled prescriptions, ARH illegally dispensed thousands of stimulant pills to its employees and their family members.

The lawsuit further alleged that ARH failed to make and maintain complete and accurate records of its controlled substances at two other pharmacies, Hazard ARH Regional Medical Center Clinic Pharmacy and Middlesboro ARH Pharmacy, and that, because of that failure, Government auditors were prevented from being able to determine whether other controlled substances had been diverted for illegal use.

Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky and the Drug Enforcement Administration, Diversion Control Division jointly announced the settlement.  The Diversion Control Division and the U.S. Attorney’s Office conducted the investigation of alleged violations.  Assistant U.S. Attorneys Katherine Crytzer and Daniel Hancock represented the federal government in this case.