United States Drug Enforcement Administration

SAN DIEGO - Dr. David J. Smith, a pain management physician, and his office manager, Julia Ann Oertle, are charged in a federal grand-jury indictment with perpetuating a long-running scheme to commit healthcare fraud and to manufacture and distribute adulterated fentanyl.

Smith made his initial appearance today before U.S. Magistrate Judge Bernard G. Skomal. Smith’s bond was set at $1 million, secured by real property, with a limitation on his ability to practice medicine. Oertle was still at large.

According to allegations in the indictment, Smith purports to specialize in the installation and maintenance of intrathecal pain pumps which are surgically placed in a patient’s stomach with two catheters implanted on the spine; pain medicine is then infused into a reservoir in the pump periodically and meted out directly into the spine.

Beginning in December 2017, Smith and Oertle began compounding fentanyl citrate into vials, in a room at Smith’s principal medical practice, San Diego Comprehensive Pain Management Center. According to the indictment, this compounding practice was grossly improper and resulted in the production of adulterated fentanyl. Smith nevertheless directed administration of this fentanyl to patients repeatedly.

The indictment alleges that beyond providing patients with adulterated fentanyl, Smith violated the applicable standards of care by, among other things, prescribing materially excessive quantities of fentanyl, prescribing unnecessary oral opioid medications in conjunction with pain-pump medication, and installing pain pumps in patients without proper assessments for patient need. Smith then had false and fraudulent reimbursement claims submitted to Medicare for these administrations. Among other things, the claims were inflated by nearly 60 percent; they sought reimbursement for large volumes of unnecessarily manufactured fentanyl; they falsely represented that excess fentanyl had been discarded, when in fact it was used; and they did not disclose that the fentanyl was adulterated.

According to the indictment, Oertle illegally ordered fentanyl citrate for compounding; compounded fentanyl with Smith; and helped direct the illegal billing practices.

“The DEA is committed to bringing to justice doctors that take the public’s trust and abuse it for their own purposes,” said DEA Special Agent in Charge Shelly S. Howe. “We are grateful for our relationships with the U.S. Attorney’s Office, the FBI and the other agencies who worked to bring these defendants to justice.”

“We are supposed to be able to trust our doctors with our lives,” said U.S. Attorney Randy Grossman. “This office will use all its resources to protect vulnerable patients from doctors who use them to make money, with no regard for their safety.”

“Criminal misconduct within the healthcare system is not only deceitful, but also destructive,” said Special Agent in Charge Stacey Moy of the FBI’s San Diego Field Office. “David Smith and Julia Oertle allegedly abused their positions of trust by manufacturing and propagating this toxic poison to patients over an extended period of time, further unraveling the fentanyl crisis our country is experiencing. This investigation clearly demonstrates that the threat of the opioid crisis extends far beyond street level dealing. The FBI will continue to work with our law enforcement partners to protect our communities and ensure justice is served.”

“U.S. consumers must be able to trust that their medicines meet FDA’s required standards of safety and effectiveness,” said Acting Special Agent in Charge Christopher M. Alston, FDA Office of Criminal Investigations Los Angeles Field Office. “Our office will continue to pursue and bring to justice those who jeopardize the public’s health and the public’s trust.”

“According to allegations in the indictment, these defendants were trusted with the medical care of their patients but instead used treatments that were not medically necessary in order to gain financially,” stated Special Agent in Charge Tyler Hatcher of the IRS Criminal Investigation’s Los Angeles Field Office. “We will continue to serve the public and help put a stop to schemes like this that take advantage of our medical system and put patients’ care at risk.”

AGENCIES

Federal Bureau of Investigation, United States Attorney’s Office, Food and Drug Administration, U.S. Department of Health and Human Services, U.S. Marshal Service, and the Internal Revenue Service

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