LITTLE ROCK — Saying he was the anonymous tipster whose 2009 telephone call to a Medicaid fraud hot line resulted in the prosecution and conviction of Dr. Kelly Shrum, a Monticello obstetrician and gynecologist, a former Bayer Pharmaceuticals employee is seeking a financial reward.
In a motion filed Thursday in federal court in Little Rock, Mike Townsend seeks permission to petition the court for an award equal to 10 percent of the “aggregate penalty recovered from Kelly Shrum.”
On Sept. 30, U.S. District Judge James Moody sentenced Shrum, 43, to five years’ probation and ordered him to pay $204,194.49 in restitution for his convictions last November on a felony charge of health care fraud and a misdemeanor charge of introducing misbranded drugs into interstate commerce.
Moody refused to send Shrum to prison for supplying about 350 patients, most of them low-income patients, with birth-control devices ordered over the Internet from outside the United States. The probationary sentence, however, requires Shrum to perform 200 hours of community service work each of the five years.
The Mirena intrauterine devices ordered through online pharmacies were chemically identical to, and made in the same Finnish factory as, the Mirena devices sold in the United States with the approval of the U.S. Food and Drug Administration.
However, the devices ordered online cost considerably less. Also, the FDA didn’t authorize the sale in the United States of the devices sold overseas because it couldn’t guarantee that they had been handled correctly, such as being maintained at a proper temperature, until implantation.
Shrum was convicted of billing Medicaid and other insurance companies for the cost of the more expensive, FDA-approved devices even when he used the lower-cost ones. But Shrum said he had no choice, because the Medicaid and insurance billing forms only contained one code under which doctors could seek reimbursement for inserting Mirena devices, and that code was for the FDA-approved version.
After Shrum was sentenced, the Arkansas State Medical Board approved a waiver allowing him to keep his medical license despite the felony conviction.
Arkansas law prohibits doctors from holding a license if they are “found guilty of either an infamous crime that would impact his or her ability to practice medicine in the State of Arkansas or a felony.”
But a bill passed in the 2011 legislative session modified the law to allow the board to grant a waiver allowing the physician to maintain his license based on factors such as age, when the crime was committed, character references or “other evidence demonstrating that the applicant does not pose a threat to the health or safety of the public.”
In his motion, Townsend said he made an anonymous call in April 2009 to the Medicaid fraud hot line at the Arkansas attorney general’s office “to report his discovery”about Shrum’s billing practices involving Mirena.
“Although Mike Townsend had initially reported the fraud anonymously in early 2009, the United States Attorney’s Office and the Department of Justice traced Townsend’s identity from phone logs and deemed the case against Kelly Shrum a ‘matter of national health concern’ more important than Townsend’s anonymity,” says the motion, filed by attorney Robert Cortinez II.
“As feared, after eleven years of service, Bayer Pharmaceutical fired Mike Townsend on May 5, 2010,” Cortinez wrote. “Mr.Townsend has been unable to find similar employment since and, along with his family, has endured extreme financial strain as a result.”
The motion cites Townsend’s full cooperation with authorities in Shrum’s prosecution, “even when his identity was no longer kept anonymous,” and notes that a section of the state Medicaid Fraud Act allows financial awards for reporters of Medicaid fraud and abuse.
The motion quotes the law as saying, “The court may pay a person such sums, not exceeding (10 percent) of the aggregate penalty recovered, or in any case not more than ($100,000), as the court may deem just, for information the person may have provided which led to detecting and bringing to trial and punishment a person guilty of violating the Medicaid fraud laws.”
Arkansas, Pages 12 on 10/29/2011