A sentence and fines were handed down Friday in the case of Dr. Kelly Shrum of Monticello.
In November of 2010, a federal jury found Shrum, an obstetrician/gynecologist, guilty of one count of misdemeanor misbranding in violation of the Food, Drug, & Cosmetic Act and one count of health care fraud. The charges stemmed from allegations that Shrum, 43, misbranded and billed Medicaid for Mirena IUD contraceptives manufactured in Finland by Bayer and purchased through a Canadian pharmacy instead of from Bayer’s designated United States sales distributor. At the time, Shrum was practicing in Pine Bluff.
Shrum was sentenced by the Honorable James M. Moody to five years probation on each count of his conviction, to be served concurrently. He was ordered to serve 200 hours community service each year of his probation and to pay $204,194.49 restitution and to forfeit $75,000 of proceeds from the health care fraud.
Of the sentencing, Drew Memorial Hospital CEO Michael Layfield said, “The entire Drew Memorial Hospital family, the hospital board, medical staff and employees, are very pleased with Judge Moody’s decision to only give Dr. Shrum probation for what many of us consider to be a hypertechnical and extremely unusual prosecution for his obtaining birth control devices for his patients at a fraction of the cost charged by pharmaceutical suppliers in the U.S.”
Layfield added: “Judge Moody’s probation decision is important because that means that there will be no interruption of Dr. Shrum’s delivery of excellent obstetric and gynecological care to our patients. Since Dr. Shrum came to Drew Memorial about two years ago, he has delivered approximately 340 babies and provided 640 gynecological surgeries and, consequently, has been a critical part of our effort to meet the health care needs of the citizens of our area. We very much appreciate Dr. Shrum’s dedication to the care of our patients that come from all over Southeast Arkansas.”
The sentencing announcement was made by Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, and Patrick J. Holland, Special Agent in Charge of the Food and Drug Administration’s Office of Criminal Investigations for the Kansas City Field Office.
“The conviction, and subsequent sentencing of Dr. Shrum, is a significant case in the protection of the taxpayers’ health care and their money from health care fraud,” stated Thyer.
“This office is committed to continuing our relationship with the Food and Drug Administration and Arkansas Attorney General’s Office to protect the citizens who put their trust in physicians to provide them with approved drug products.”
“Americans must have confidence that their health care providers are receiving and administering drugs that fully comply with U.S. laws,” said Holland. “The FDA will aggressively pursue all those who seek to profit from causing the importation and distribution of misbranded foreign drugs.”
This investigation began in April of 2009, with an anonymous tip to the Medicaid Fraud Control Unit of the Arkansas Attorney General’s Office hotline regarding Shrum’s use of an intrauterine device (IUD) that had not been approved by the Food & Drug Administration for distribution in the United States. During the execution of a search warrant at Shrum’s former
office at the Arkansas Center for Women, LTD in Pine Bluff, federal agents located non-FDA-approved IUDs, which were labeled in Scandinavian and Turkish languages.
From January of 2008 through June of 2009, Shrum billed the Arkansas Medicaid Program as if he was providing Medicaid beneficiaries with the FDA-approved, Bayer manufactured IUD, Mirena ®, when in fact, he was providing the beneficiaries with a non-FDA approved IUD. In that time period, Arkansas Medicaid paid Shrum over $162,000 on fraudulent claims for Mirena.
During the same time frame, Shrum was paid by TRICARE, private insurance companies, and self pay patients, for the non-FDA-approved IUD for an additional $42,000 in fraudulent claims.