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FORMER PINE BLUFF PHYSICIAN INDICTED BY FEDERAL GRAND JURY

By Ray King/OF THE COMMERCIAL STAFF
Friday, October 9, 2009 9:31 AM CDT

A doctor who formerly practiced at Pine Bluff and allegedly gave his patients an unapproved intrauterine device was indicted Thursday by a federal grand jury at Little Rock.

United States Attorney Jane Duke said Kelly Dean Shrum, 41, was charged with one count of misbranding in violation of the Food, Drug and Cosmetic Act, one count of health care fraud, and three counts of money laundering.

Shrum, who operated the Arkansas Center for Women at 1609 W. 40th Ave., has closed his practice here and moved to Monticello where he was hired by Drew Memorial Hospital. He sold the Pine Bluff property to Jefferson Regional Medical Center Development, Inc., for $311,000 on July 14.

Agents from the Food and Drug Administration’s Office of Criminal Investigations served a search warrant at Shrum’s office June 17, and according to the indictment, “located several non-approved versions of the Bayer manufactured IUD Mirena,” which Duke said in a news release in June were manufactured in Europe for distribution outside the United States.

“It is unknown whether that version is safe/and or effective,” Duke said, explaining that only products that have received FDA approval may be brought into the United States legally.

The health care fraud charge alleges that Shrum billed the Arkansas Medicaid program for the more expensive, FDA approved versions of the IUD device while providing patients with the “significantly cheaper, non-FDA approved version” of the device.

The Medicaid payments were deposited into Shrum’s account electronically and the money laundering charges allege Shrum “engaged in several financial transactions in excess of $10,000 involving money withdrawn from the account into which Medicaid deposited its reimbursements to Shrum.”

After the investigation was announced, the Arkansas Department of Human Services Division of Medical Services suspended payments to Shrum. On Sept. 2, DHS spokeswoman Julie Munsell told The Commercial the division reached an agreement with Shrum on July 30 allowing him to again receive payments for services, except those related to intrauterine contraception products.

“In our ongoing effort to combat fraud, waste and abuse in federal health care programs, we must put an end to schemes such as Dr. Shrum’s, which serve no other purpose than to line the pocket of a physician at the expense of the very program designed to meet the health care needs of the indigent in our state,” Duke said.

Steve Holt, special agent in charge of the FDA Office at Kansas City, whose agents were involved in the investigation, said “the regulatory process involved in approving new drugs exist for the sole purpose of protecting the public.

“The agency will continue to investigate and prosecute individuals who attempt to put profits before the public health by causing the distribution of drugs that do not comply with FDA’s laws and regulations,” Holt said.

Shrum was to have opened a practice in Monticello on Oct. 19.

Drew Memorial CEO Mike Layfield , who confirmed Shrum’s hiring by the hospital Sept. 2, was out of the office until Monday and Keith Van Dee, the human resources director at the Drew Memorial, said Thursday he was not aware of the indictment.

Attempts to contact Shrum at his office in Monticello were unsuccessful.

Duke said the maximum punishment on the misbranding allegation is three years in prison and a fine of $10,000, and the maximum penalty for health care fraud and each count of money laundering is 10 years in prison and a fine of $250,000.

The grand jury indictment contains only allegations, and Shrum is considered innocent until proven guilty, the U.S. Attorney’s Office said.

Assistant United States Attorney Laura G. Hoey was assigned to prosecute the case.

A receptionist at the clinic where Shrum worked, the Arkansas Center for Women in Pine Bluff, said Shrum was out of town Thursday. Shrum did not return a message that The Associated Press left for him. It was not clear whether Shrum has an attorney.

Commercial staff writer Wes Clement contributed to this report.

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