Case 5:21-cv-00859-JFL Document 1 Filed 02/25/21 Page 1 of 26
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`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF PENNSYLVANIA
`
`UNITED STATES OF AMERICA,
`Plaintiff,
`
`v.
`
`McELROY PHARMACY, INC. and
`JEFFREY ESHELMAN,
` Defendants.
`
`Civil Action No.
`
`Jury Trial Demanded
`
`COMPLAINT
`The United States brings this suit to hold McElroy Pharmacy and owner-pharmacist
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`Jeffrey Eshelman accountable for illegally dispensing controlled substances and healthcare fraud.
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`McElroy, a small community pharmacy in Lititz, Pennsylvania, was owned and operated in part
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`by Eshleman. Until the Drug Enforcement Administration arrived at the pharmacy, McElroy
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`was an outlier in its geographic area as the top purchaser of high-risk Schedule II opioid
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`hydrocodone. An investigation revealed that the pharmacy, through its lead pharmacist and co-
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`owner Eshelman, engaged in a years-long practice of dispensing countless pills of high-risk
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`hydrocodone to individuals in the Lititz area, knowing that the individuals had a substance use
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`disorder, without requiring a prescription. Eshelman engaged in this practice despite the
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`licensing board disciplining him for the same misconduct years prior. In addition to
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`hydrocodone, the investigation showed that the pharmacy illegally dispensed other controlled
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`substances, engaged in healthcare fraud by billing Medicare for drugs that were not actually
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`dispensed to beneficiaries, and failed to account for tens of thousands of controlled substance
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`pills due to inaccurate inventory. The egregious misconduct, particularly providing opioids to
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`individuals with opioid use disorder, caused serious public harm in the community. The United
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`States files this suit to impose civil penalties, damages, and prevent defendants from dispensing
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`controlled substances and falsely billing for other prescription medications in the future.
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`PARTIES
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`Plaintiff is the United States of America.
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`Defendant McElroy Pharmacy Inc. is a Pennsylvania corporate entity. McElroy is
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`1.
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`2.
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`owned by Jeffrey and Brenda Eshelman. McElroy was registered with the Pennsylvania
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`pharmacy licensing board. The Drug Enforcement Administration (DEA) granted McElroy a
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`registration on April 16, 1991, as a retail pharmacy authorized to purchase and dispense
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`Schedule II-V controlled substances at 100 East Main Street, Lititz, Pennsylvania. McElroy
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`Pharmacy Inc. surrendered its DEA registration in November 2019 after the Drug Enforcement
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`Administration executed an administrative inspection warrant at the pharmacy.
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`3.
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`Defendant Jeffrey Eshelman is an individual residing in Lititz, Pennsylvania.
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`Jeffrey Eshleman owned and managed McElroy Pharmacy at all times relevant to this
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`Complaint. He was registered with the Pennsylvania pharmacy licensing board as McElroy
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`Pharmacy’s pharmacist-in-charge at all times relevant to this Complaint.
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`4.
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`Defendants McElroy Pharmacy and Jeffrey Eshelman are collectively referred to
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`as the “defendants.”
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`JURISDICTION AND VENUE
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`5.
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`This action is brought by the United States for civil penalties and injunctive relief
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`under the Controlled Substances Act, 21 U.S.C. §§ 801-971, as well as civil damages and
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`penalties under the False Claims Act, 31 U.S.C. §§ 3729-33.
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`6.
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`This Court has subject matter jurisdiction over the Controlled Substances Act
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`civil penalties, 21 U.S.C. § 842, pursuant to 21 U.S.C. § 842(c)(1)(A), and 28 U.S.C. §§ 1331,
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`1345, 1355.
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`7.
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`This Court has subject matter jurisdiction over the Controlled Substances Act
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`injunctive relief, 21 U.S.C. §§ 843(f), 882, pursuant to 21 U.S.C. §§ 843(f), 882, and 28 U.S.C.
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`§§ 1331, 1345.
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`8.
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`This Court has subject matter jurisdiction over the False Claims Act count for
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`civil damages and penalties pursuant to 31 U.S.C. § 3732, and 28 U.S.C. §§ 1331, 1345, and
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`1355.
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`9.
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`This Court has personal jurisdiction over McElroy Pharmacy, Inc. because, inter
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`alia, the entity is found in, was incorporated in, transacted business in, is licensed in, and
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`engaged in the illegal conduct alleged below in this District, all of which harmed the public and
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`the United States in this District.
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`10.
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`This Court has personal jurisdiction over Jeffrey Eshelman because, inter alia, he
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`resides in, is domiciled in, transacted business in, was licensed in, and engaged in the illegal
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`conduct alleged below in this District, all of which harmed the public and the United States in
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`this District.
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`11.
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`Venue is proper in the Eastern District of Pennsylvania because the defendants
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`reside in this District, and a substantial part of the events or omissions giving rise to the claims
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`occurred in this District, 28 U.S.C. § 1391; the claims accrued in this District, and the defendants
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`are found in this District, 28 U.S.C. § 1395; and because the defendants are located, reside, did
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`business, and engaged in the illegal conduct in this District, 21 U.S.C. § 843(f); 31 U.S.C.
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`§ 3732(a).
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`THE CONTROLLED SUBSTANCES ACT
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`12.
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`The Controlled Substances Act (CSA), 21 U.S.C. § 801 et seq., and its regulations
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`govern the distribution and dispensing of controlled substances. The CSA establishes strict
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`guidelines “to ensure a sufficient supply for legitimate medical . . . purposes and to deter
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`diversion of controlled substances to illegal purposes. The substances are regulated because of
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`their potential for abuse and likelihood to cause dependence when abused and because of their
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`serious and potentially unsafe nature if not used under proper circumstances.” 75 Fed. Reg.
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`61613 (Oct. 6, 2010).
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`I.
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`Controlled substances are strictly regulated and scheduled based on their potential
`for abuse and medical uses.
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`13.
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`Federal legislation dictates how prescription drugs are categorized. Drugs can be
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`placed in Schedules I through V based on, inter alia, their “potential for abuse” and whether they
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`have “a currently accepted medical use in treatment.” 21 U.S.C. § 812(b). For example,
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`Schedule II controlled substances are those that have a “high potential for abuse” that “may lead
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`to severe psychological or physical dependence,” but have “a currently accepted medical use in
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`treatment.” Id.
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`14.
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`Pursuant to legislation and administrative action by the Drug Enforcement
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`Administration:
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`a)
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`oxycodone (including drugs that contain it such as oxycodone-
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`acetaminophen), hydrocodone, and methadone are opioids categorized as
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`Schedule II controlled substances, see 21 C.F.R. § 1308.12; and
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`b)
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`buprenorphine (including drugs that contain it, and with brand names
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`including Suboxone) is a drug categorized as a Schedule III controlled
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`substance, see 21 C.F.R. § 1308.13.
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`II.
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`Entities that purchase and dispense controlled substances directly to patients, such
`as retail pharmacies, are required to register with the DEA and subject to strict
`controls.
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`15.
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`The CSA requires those who distribute or dispense controlled substances,
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`including pharmacies that dispense controlled substances pursuant to a prescription, to obtain a
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`registration from the Drug Enforcement Administration. 21 U.S.C. § 822(a). Individuals or
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`entities who have a registration are commonly referred to as “registrants.”
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`16.
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`The registration requirements for those who dispense are based on the statute’s
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`definition of a “dispenser,” which is defined as “a practitioner who [] delivers a controlled
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`substance to an ultimate user” “pursuant to the lawful order of, a practitioner, including the
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`prescribing and administering of a controlled substance.” 21 U.S.C. § 802(10) (emphasis added).
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`That definition includes retail pharmacies that dispense controlled substances directly to patients.
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`See id. § 802(21) (defining “practitioner” to include a “pharmacy”).
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`17.
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`Even when a registrant such as a retail pharmacy falls within the definition of
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`“dispenser” and receives authorization through a DEA registration to dispense controlled
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`substances, it may only dispense a controlled substance as “authorized by their registration and
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`in conformity with the other provisions of” the CSA. Id. § 822(b).
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`III. Retail pharmacies registered with the DEA are generally permitted to deliver
`controlled substances only to patients with a valid prescription for a legitimate
`medical purpose.
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`18.
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`For those entities such as retail pharmacies registered to dispense, the CSA
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`establishes strict limitations on when a controlled substance can be dispensed to the patient and
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`ultimate user. It generally provides that, unless a non-pharmacy practitioner dispenses directly
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`or there is an emergency, Schedule II, III, and IV controlled substances can only be dispensed
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`upon a “prescription.” 21 U.S.C. § 829(a), (b).
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`19.
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`Even with an emergency, the “prescribing individual practitioner shall cause a
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`written prescription for the emergency quantity prescribed to be delivered to the dispensing
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`pharmacist” “[w]ithin 7 days after authorizing [the] emergency oral prescription.” 21 C.F.R.
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`§ 1306.11(d)(4). The prescription must also satisfy various other written requirements outlined
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`in § 1306.11 and § 1306.05.1
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`20.
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`Regardless, a prescription is effective only if issued for a “legitimate medical
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`purpose by an individual practitioner acting in the usual course of his professional practice.” 21
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`C.F.R. § 1306.04(a).
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`21.
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`In addition, the CSA’s implementing regulations provide direction specifically for
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`pharmacists by providing that “[a] prescription for a controlled substance may only be filled by a
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`pharmacist, acting in the usual course of his professional practice and either registered
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`individually or employed in a registered pharmacy . . . .” Id. § 1306.06.
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`22.
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`The CSA’s implementing regulations explicitly warn pharmacists of the
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`consequences of dispensing a controlled substance without satisfying these requirements. “[A]
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`corresponding responsibility [for proper dispensing of controlled substances] rests with the
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`pharmacist who fills the prescription. An order purporting to be a prescription issued not in the
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`usual course of professional treatment . . . is not a prescription within the meaning and intent of
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`section 309 of the Act (21 U.S.C. 829) and the person knowingly filling such a purported
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`prescription . . . shall be subject to the penalties provided for violations of the provisions of law
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`relating to controlled substances.” § 1306.04(a); see also United States v. Rottschaefer, 178 F.
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`App’x 145, 147 (3d Cir. 2006) (“The CSA’s implementing regulations provide that, to be
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`1 With respect to the form of the prescription, the CSA’s implementing regulations require that
`a prescription for a controlled substance “be dated as of, and signed on, the day when issued and
`shall bear the full name and address of the patient, the drug name, strength, dosage form,
`quantity prescribed, directions for use, and the name, address and registration number of the
`practitioner.” Id. § 1306.05(a).
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`effective, a prescription ‘must be issued for a legitimate medical purpose by an individual
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`practitioner acting in the usual course of his professional practice’ . . . .”).
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`23. With respect to a pharmacist’s “corresponding responsibility” to ensure proper
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`dispensing of controlled substances, pharmacists have a legal duty to ensure that prescriptions for
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`controlled substances are legitimate before dispensing the controlled substance. In other words,
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`the fact that a licensed physician actually or ostensibly prescribed a controlled substance does not
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`obligate a pharmacist to fill that prescription. A reasonably prudent pharmacist must be familiar
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`with suspicious activity or “red flags” indicating that the controlled substances prescribed are at
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`risk for abuse or diversion.
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`24.
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`Generally, a “red flag” is anything about a controlled substance prescription that
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`would cause the pharmacist to be concerned that the prescription was not issued for a legitimate
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`medical purpose by a registered prescriber in the usual course of professional practice.
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`25. When confronted with one or multiple red flags concerning a prescription for
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`controlled substances, a pharmacist must intervene and resolve the red flags to determine
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`whether the prescription is for a legitimate purpose before filling the prescription. The
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`pharmacist must also document his or her findings for future use and reference.
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`26.
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`As a general matter, when red flags remain unresolved, a reasonable pharmacist
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`exercising his or her corresponding responsibility should not dispense the controlled substance
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`prescription.
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`IV.
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`The CSA imposes strict obligations on dispensers to comply with record-keeping
`requirements to ensure accountability and protect against diversion of controlled
`substances.
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`27.
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`Entities registered with the DEA to dispense controlled substances are also
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`obligated to comply with important record-keeping and accountability measures to protect
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`against the loss and diversion of controlled substances.
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`28.
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`For example, every entity registered to dispense controlled substances is obligated
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`to conduct a biennial inventory that includes “a complete and accurate record of all stocks
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`thereof on hand,” 21 U.S.C. § 827(a)(1); 21 C.F.R. § 1304.11(a), (c), (e)(6); “maintain, on a
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`current basis, a complete and accurate record of each such substance . . . received, sold,
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`delivered, or otherwise disposed of by him,” including a record of dispensing, 21 U.S.C.
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`§ 827(a)(3); 21 C.F.R. § 1304.21(a); § 1304.22(c); and maintain the prescriptions underlying the
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`dispensing, § 1304.04(h).
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`29.
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`To the extent a dispenser has a theft or loss of a controlled substance, which
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`would impact these inventory and accountability counts of the controlled substances, the
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`dispenser is required to file a theft/loss report with the DEA. 21 C.F.R. § 1301.76(b).
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`V.
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`Pharmacies and pharmacists that dispense illegitimate prescriptions expose
`themselves to substantial civil penalties.
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`30.
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`The CSA imposes substantial civil penalties on pharmacies and pharmacists who
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`dispense controlled substances in violation of their corresponding responsibility.
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`31.
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`Any person “who is subject to the requirements of [the CSA who] distribute[s] or
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`dispense[s] a controlled substance in violation of [the valid prescription requirement in] section
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`829 of this title” is subject to a significant civil penalty per violation. 21 U.S.C. § 842(a)(1); see,
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`e.g., United States v. City Pharmacy, LLC, No. 3:16-CV-24, 2017 WL 1405164, at *4 (N.D.W.
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`Va. Apr. 19, 2017), aff’d sub nom. United States v. Wasanyi, 801 F. App’x 904 (4th Cir. 2020).
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`32.
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`Each violation exposes the pharmacy and pharmacist to “a civil penalty of not
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`more than $25,000” for each violation on or before November 2, 2015, and not more than
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`$67,627 for each violation after November 2, 2015. 21 U.S.C. § 842(a)(1), (c)(1)(A); 28 C.F.R.
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`§ 85.5.
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`MEDICARE PART D
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`33. Medicare is a federal program administered by the Centers for Medicare &
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`Medicaid Services (CMS), a federal agency within the U.S. Department of Health and Human
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`Services, to pay for the costs of certain health care services provided to eligible individuals.
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`Individual entitlement to Medicare is largely based on age, disability, or affliction with end-stage
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`renal disease. 42 U.S.C. §§ 426, 426-1.
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`34.
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`One piece of the Medicare program is Medicare Part D, which covers the costs of
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`certain prescription drugs for Medicare beneficiaries. 42 U.S.C. § 1395w-101(a)(3)(A); 42
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`C.F.R. § 423.30(a).
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`35. Medicare provides Part D coverage through plan “sponsors,” which are private
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`entities that administer the prescription drug plans on behalf of the federal government.
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`36.
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`Generally, pharmacies submit claims to Medicare Part D for covered outpatient
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`drugs. Part D plan sponsors provide reimbursement to pharmacies for these drugs, such as
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`Nexium, Advair Diskus, Crestor, Abilify, and Cymbalta, dispensed to Medicare beneficiaries
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`enrolled in Part D.
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`37.
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`The pharmacy’s claims for these drugs are documented in a prescription drug
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`event (PDE) record, which contains information about the drug dispensed, the beneficiary, the
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`practitioner who prescribed the drug, and the drug’s cost. Medicare relies on the accuracy of the
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`information in the claim when making payments.
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`38.
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`CMS makes payments to reimburse the sponsors through (a) monthly estimated
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`payments based upon the beneficiaries enrolled; (b) cost-sharing subsidies for low-income
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`individuals; and (c) payments made annually that reconcile the estimated monthly payments with
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`the allowable costs the sponsor actually incurred. The PDE records are a significant factor
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`determining the reimbursement amounts.
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`39.
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`Part D plan sponsors repeatedly certify their compliance with applicable federal
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`laws, regulations, and CMS guidance and certify to the accuracy and truthfulness of the data in
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`the PDE records as a condition of payment.
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`40. Medicare only covers drugs that are for a medically accepted indication, which is
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`approved under the Food, Drug, and Cosmetic Act, or as supported in one of the listed
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`compendia. 42 U.S.C. §§ 1395w-102(e), 1396r-8(g)(1)(B) & (k)(6); 42 C.F.R. § 423.100. Any
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`drugs that do not comply with this requirement render the PDE inaccurate, incomplete, and/or
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`untruthful.
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`41.
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`If prescriptions are issued for something other than a medically accepted
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`indication, they are not covered by Part D. 42 U.S.C. §§ 1395w-102(e), 1396r-8(k)(6).
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`42.
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`In addition, Part D plan sponsors are only permitted to provide benefits for Part D
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`drugs “that require a prescription if those drugs are dispensed upon a valid prescription.” 42
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`C.F.R. § 423.104(h). A prescription is only valid if it “complies with all applicable State law
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`requirements constituting a valid prescription.” 42 C.F.R. § 423.100.
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`FACTS
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`I.
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`McElroy Pharmacy registered with the DEA in 1991 to start operating as a retail
`pharmacy.
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`43.
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`As outlined above, defendant McElroy Pharmacy Inc. is a Pennsylvania corporate
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`entity co-owned and operated by Jeffrey Eshelman. The Drug Enforcement Administration
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`(DEA) granted McElroy a registration on April 16, 1991, as a retail pharmacy authorized to
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`purchase and dispense Schedule II-V controlled substances at 100 East Main Street, Lititz,
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`Pennsylvania.
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`44.
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`Defendant Jeffrey Eshelman is a citizen of the Commonwealth of Pennsylvania
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`and resides in Lititz, Pennsylvania. Eshelman is a pharmacist who was licensed in Pennsylvania.
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`Eshelman worked as a pharmacist at McElroy Pharmacy since 1977, and he became the owner
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`and pharmacist-in-charge at all times relevant to this complaint.
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`II.
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`The licensing board previously disciplined Jeffrey Eshelman for illegally dispensing
`drugs.
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`45.
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`In 2006, the Pennsylvania State Board of Pharmacy issued a consent agreement
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`and order against Jeffrey Eshelman.
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`
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`46.
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`The order focused on controlled substances improperly dispensed without a
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`prescription by Jeffrey Eshelman or someone “in his employ” at McElroy Pharmacy.
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`47.
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`Eshelman admitted that from January 2, 2001 through December 30, 2002, he or
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`another pharmacist “in his employ” at McElroy Pharmacy improperly dispensed Schedule IV
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`controlled substances to an individual on 115 occasions, but only had 19 supporting
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`prescriptions.
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`48.
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`Eshelman admitted that, “[o]n all but approximately 19 occasions, [Eshelman]
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`permitted Patient R.S. to telephone the pharmacy to advise them that [the physician] had written
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`a new prescription for [the controlled substance] and that he would bring in the written
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`prescription to the pharmacy when he would pick up the medication.”
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`49.
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`However, McElroy Pharmacy lacked the prescriptions for the almost-100
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`instances of dispensing.
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`50.
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`The licensing board issued a public reprimand to Jeffrey Eshelman for the
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`misconduct, issued a substantial civil penalty, required continuing education, and placed his
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`license on probationary status.
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`51.
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`Eshelman admitted to the facts and accepted the discipline.
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`III. After standing as an outlier in hydrocodone purchasing, the Drug Enforcement
`Administration executed an administrative inspection warrant in November 2019.
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`52.
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`On November 15, 2019, the Drug Enforcement Administration (DEA) applied for
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`an administrative inspection warrant (AIW) for McElroy Pharmacy.
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`53.
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`The application for an AIW recognized that McElroy’s purchasing of the
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`Schedule II opioid hydrocodone was excessive and an outlier in its geographic area.
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`54.
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`The diversion investigator noted in the application that, on August 15, 2019, a
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`query was submitted for McElroy’s controlled substance purchasing through the DEA’s
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`Automation of Reports and Consolidated Orders System (ARCOS). ARCOS is designed to track
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`the delivery of certain controlled substances from the manufacturer all the way through its
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`purchase by a pharmacy or other dispenser. ARCOS allows the DEA to track the quantity and
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`types of purchases that pharmacies are making and compare those purchases to other pharmacies.
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`However, the ARCOS system does not track full purchase history for all schedules of controlled
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`substances.
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`55.
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`A comparison was made of the ARCOS ordering patterns for McElroy with
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`pharmacies located in zip codes with the same first three digits from January 1, 2018 through
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`August 1, 2019. During this time frame, there were at least 50 additional DEA registered
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`pharmacies located in the 175__ zip code set. The comparison indicated that McElroy ranked as
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`the top pharmacy in the purchasing of Hydrocodone product compared to other local pharmacies
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`in the 175__ zip code set. While in 2018 McElroy was ranked as the fourth highest purchaser of
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`Hydrocodone product, McElroy was the top purchaser for 2019 at the time of the query,
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`purchasing 53,710 tablets of combined hydrocodone product. The second top pharmacy only
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`purchased 50,600 tablets of combined hydrocodone product.
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`56.
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`On November 15, 2019, a magistrate judge granted the AIW. The DEA executed
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`the warrant at McElroy, and federal investigators served McElroy with an administrative
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`subpoena.
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`IV. DEA and HHS/OIG’s investigation revealed that McElroy Pharmacy, through
`Jeffrey Eshelman, had dispensed countless controlled substances for years without a
`prescription, engaged in healthcare fraud, and failed to properly inventory its pills.
`
`57.
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`The DEA and the U.S. Department of Health and Human Services, Office of
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`Inspector General (HHS/OIG) conducted a joint investigation, in parallel with a state criminal
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`investigation.
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`58.
`
` The investigators determined that McElroy Pharmacy, through Jeffrey
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`Eshelman, had: (a) dispensed hydrocodone and other controlled substances for years to
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`individuals with opioid use disorder without requiring any prescription; (b) engaged in healthcare
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`fraud by billing for and being reimbursed for more-expensive brand name drugs, while actually
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`dispensing lower-cost generic drugs; and (c) failing to properly inventory and track the
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`pharmacy’s controlled substances.
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`A. McElroy Pharmacy dispensed countless controlled substances, including
`hydrocodone, to individuals with substance use disorder without requiring a
`prescription.
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`59.
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`Despite being disciplined by the pharmacy licensing board for the same issue
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`years before, McElroy Pharmacy, through Jeffrey Eshelman, had dispensed hydrocodone and
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`other controlled substances for years to individuals with substance use disorder without requiring
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`any prescription.
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`60.
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`For example, with respect to Patient A, Eshelman knew that Patient A had a
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`substance use disorder. Nonetheless, for years he dispensed hydrocodone pills without any
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`prescription.
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`61.
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`As part of their practice, Patient A would drive up to the rear parking lot at
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`McElroy Pharmacy. Eshelman would then walk out the back door of the pharmacy and bring the
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`hydrocodone pills to Patient A in his/her vehicle.
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`62.
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`Eshelman did not require a prescription and had engaged in this blatantly illegal
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`dispensing of the dangerous controlled substance for years.
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`63.
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`This is only one example of Eshelman illegally dispensing controlled substances
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`at least over a hundred times, if not more, without a valid prescription. Eshelman repeatedly did
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`so without any prescription, with fake prescriptions, and with fake patient names.
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`64.
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`Eshelman was charged by state authorities for some of his conduct in this scheme.
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`On August 25, 2020, defendant Jeffrey Eshelman pled guilty in the Pennsylvania Court of
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`Common Pleas in Lancaster County to four ungraded felony counts of possession of a controlled
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`substance with the intent to deliver under 35 Pa. Stat. § 780-113(a)(30); two ungraded
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`misdemeanor counts of refusal to keep records for a controlled substance as required by law
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`under § 780-113(a)(21); two ungraded misdemeanor counts of selling controlled substances
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`without labels under § 780-113(a)(18); and two ungraded misdemeanor counts of the sale or gift
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`of a controlled substance to a drug-dependent person under § 780-113(a)(13).
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`65. While difficult to precisely calculate due to the blatantly illegal method by which
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`Eshelman would dispense the controlled substances without any record of the dispensing,
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`investigators determined that McElroy Pharmacy, through Eshelman, dispensed controlled
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`substances without a prescription on at least 199 different occasions.
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`B. McElroy Pharmacy also engaged in extensive healthcare fraud by submitting
`false claims to Medicare Part D for brand drugs while dispensing generic
`drugs.
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`66.
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`In addition to dispensing controlled substances without a valid prescription,
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`federal investigators also learned that defendants created duplicate prescriptions for non-
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`controlled substances within the pharmacy’s computer system. Defendants would then submit
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`these false prescriptions to insurance companies, such as Medicare, for reimbursement.
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`Case 5:21-cv-00859-JFL Document 1 Filed 02/25/21 Page 16 of 26
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`Additionally, defendants would bill for the more expensive, brand-name medications, but
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`dispense the less expensive generic versions to the beneficiaries.
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`67.
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`An analysis of McElroy’s claim billings and medication purchase history made
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`the scheme clear. McElroy had a significant gap between what it billed to Medicare Part D and
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`what it purchased. Defendants engaged in this scheme to bill for drugs not purchased or
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`dispensed to patients from at least January 2016 until August 2020. By participating in this
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`scheme, defendants increased their profits at the expense of the United States.
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`C. McElroy also failed to properly account for tens of thousands of missing
`controlled substances in their inventory.
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`68.
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`Finally, when the DEA conducted its inspection, it conducted an accountability
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`audit of ten different controlled substances to determine whether McElroy had properly
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`accounted for the drugs.
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`69.
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`The audit revealed that McElroy was missing, in some cases, tens of thousands of
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`controlled substance units that it had failed to properly account for in its inventory and
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`dispensing data for nine out of the ten controlled substances audited, including various dosages
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`of hydrocodone-acetaminophen, hydrocodone-ibuprofen, methadone, oxycodone, and Suboxone.
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`70. When the DEA raised the discrepancies, McElroy was unable to account for the
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`discrepancies.
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`COUNT I:
`Unlawful Dispensing of Controlled Substances:
`21 U.S.C. §§ 842(a)(1), 829
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`71.
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`72.
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`The United States realleges the above paragraphs as if fully set forth herein.
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`Defendants McElroy Pharmacy and Jeffrey Eshelman are subject to the
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`requirements of Part C of the CSA, 21 U.S.C. § 822.
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`Case 5:21-cv-00859-JFL Document 1 Filed 02/25/21 Page 17 of 26
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`73.
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`As outlined above, between October 3, 2017 and November 18, 2019, McElroy
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`Pharmacy and Jeffrey Eshelman illegally dispensed controlled substances, including
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`hydrocodone, without a valid and effective prescription, in violation of 21 U.S.C. § 829.
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`74.
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`By dispensing controlled substances at least 199 times between October 3, 2017
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`and November 18, 2019 in violation of 21 U.S.C. § 829, defendants McElroy Pharmacy and
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`Jeffrey Eshelman violated 21 U.S.C. § 842(a)(1) on at least 199 occasions.
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`75.
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`As a result of the violations set forth above, defendants McElroy Pharmacy and
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`Jeffrey Eshelman are subject to the relief set forth in the CSA.
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`COUNT II:
`Negligent Refusal to Comply with Controlled Substances Act Record-Keeping
`Requirements:
`21 U.S.C. § 842(a)(5)
`
`76.
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`77.
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`The United States realleges the above paragraphs as if fully set forth herein.
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`Defendants McElroy Pharmacy and Jeffrey Eshelman repeatedly refused or
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`negligently failed to make, keep, or furnish records, reports, notifications, orders and order
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`forms, statements, invoices, and information required by the CSA between October 3, 2017 and
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`November 18, 2019.
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`78.
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`First, between October 3, 2017 and November 18, 2019, defendants McElroy
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`Pharmacy and Jeffrey Eshelman refused or negligently failed to make, keep, and furnish an
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`accurate biennial inventory of the firm’s Schedule II controlled substances as required by 21
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`U.S.C. § 827(a)(1); 21 C.F.R. § 1304.11, for controlled substances including: hydrocodone-
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`acetaminophen 10-325mg; hydrocodone-acetaminophen 7.5-325mg; hydrocodone-
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`acetaminophen 5-325mg; hydrocodone-ibuprofen 7.5-200mg; hydrocodone-acetaminophen 5-
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`300mg; hydrocodone-acetaminophen 10-300mg; methadone 10mg; oxycodone 15mg; and
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`oxycodone 30mg.
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`Case 5:21-cv-00859-JFL Document 1 Filed 02/25/21 Page 18 of 26
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`79.
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`Second, between October 3, 2017 and November 18, 2019, defendants McElroy
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`Pharmacy and Jeffrey Eshelman refused or negligently failed to make, keep, and furnish accurate
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`records, reports, notifications, orders and order forms, statements, invoices, and information to
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`properly document its inventory for the Schedule III controlled substance Suboxone 8mg-2mg
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`S.L. Film, as required by 21 U.S.C. § 827(a)(1); 21 C.F.R. § 1304.11, when it failed to pass the
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`accountability audit.
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`80.
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`As a result of the violations set forth above, defendants McElroy Pharmacy and
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`Jeffrey Eshelman are subject to the relief set forth in the CSA.
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`COUNT III:
`Knowingly Presenting and Causing the Presentation of False Claims:
`31 U.S.C. § 3729(a)(1)(A)
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`81.
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`82.
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`The United States realleges the above paragraphs as if fully set forth herein.
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`Defendants McElroy Pharmacy and Jeffrey Eshelman, between January 1, 2016
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`and August 28, 2020, by dispensing the less expensive generic version of drugs, but falsely
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`claiming to dispense the more expensive brand version through its billings to Medicare Part D
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`and thereby receiving higher reimbursement than if they had truthfully represented the drug
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`dispensed, knowingly presented and caused the presentation of false and fraudulent claims for
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`payment or approval to Medicare, in violation of 31 U.S.C. § 3729(a)(1)(A).
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`83. McElroy Pharmacy’s inventory and purchase history show that McElroy never
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`had or purchased inadequate amounts of prescription drugs than the quantities for which it was
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`reimbursed. They did not have sufficient medication inventory to have dispensed all the drugs
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`for which it billed. Defendants therefore knowi