Physician Assistant to Pay $25,000 to Resolve Allegations of Receiving Kickbacks from Pharmaceutical Company

PHILADELPHIA – First Assistant United States Attorney Jennifer Arbittier Williams announced that physician assistant Sarah Malstrom will pay $25,000 to resolve allegations that she received kickbacks from the company formerly named Aqua Pharmaceuticals, in order to incentivize Malstrom to prescribe Aqua’s dermatology drugs.

The settlement resolves allegations that Malstrom knowingly solicited and received kickbacks from Aqua Pharmaceuticals.  Malstrom allegedly received different forms of kickbacks from Aqua, through its sales representatives and executives, such as improper in-office and out-of-office meals and food items, gift cards, and gifts, and also entered into speaking engagements, advisory boards, and consulting services in exchange for compensation intended in part to induce Malstrom to prescribe Aqua drugs. This settlement follows the resolution with the pharmaceutical company, which called for a $3.5 million payment to resolve the kickback allegations.

“Our Office is committed to ensuring the integrity of the healthcare system by investigating and challenging improper arrangements between pharmaceutical companies and healthcare providers, especially when they distort prescribing decisions made by healthcare providers,” said First Assistant U.S. Attorney Williams. “That commitment to accountability extends not just to the pharmaceutical companies, but also to the individual providers. This resolution marks another important step in that commitment and our Office’s ongoing investigation.”

“We consider kickbacks offered to healthcare providers to be an area of serious concern,” said Maureen R. Dixon, Special Agent in Charge of the Office of Inspector General, U.S. Department of Health and Human Services in Philadelphia. “We will continue to work with the U.S. Attorney’s Office to hold companies and providers accountable for illegal kickback conduct and to root out fraud, waste and abuse in our federal health care programs.”

"I commend the Department of Justice and the U.S. Attorney’s Office for continuing to be vigilant in holding health care providers accountable to ensure taxpayer dollars are appropriately utilized,” said Lt. Gen. Ron Place, director of the Defense Health Agency. “The efforts of the Department of Justice strengthen the protection of health care benefits our service members, veterans and their families receive. The Defense Health Agency continues its commitment to work closely with the Justice Department, and other state and federal agencies to investigate all those who participate in fraudulent practices.”

This investigation was conducted with the Office of the Inspector General of the Department of Health and Human Services and the Defense Health Agency. For the United States Attorney’s Office, Assistant United States Attorney Anthony D. Scicchitano and Auditor Dawn Wiggins handled the investigation and settlement.

The claims resolved by the settlement are allegations only; there has been no determination of liability.