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Rideout Health to Pay Civil Monetary Penalties to Resolve Controlled Substance Act Claims

DEC 06 (SACRAMENTO, Calif.) – Rideout Health will pay the United States $2,425,000 to settle the federal claims of alleged violations of the Controlled Substances Act by three of Rideout Health’s facilities in Yuba and Sutter Counties: Rideout Memorial Hospital, Fremont Medical Center, and Feather River Surgery Center, United States Attorney Phillip A. Talbert and Drug Enforcement Administration Special Agent in Charge John J. Martin announced today.

In addition, Rideout Health has agreed to a three-year compliance plan. The payment and plan resolve the United States claims that the three Rideout Health facilities failed to properly record and maintain thousands of transactions involving controlled substances in violation of the Controlled Substances Act and its implementing regulations.

The settlement also resolves the United States’ contention that the system Rideout Health used during that time to distribute controlled substances between these facilities failed to provide sufficient security controls. This settlement arises from a Drug Enforcement Administration (DEA) investigation that began after DEA received information from the California State Board of Pharmacy that Fremont Medical Center’s DEA Registration had expired, and that from October 23, 2012, to October 23, 2014, pharmacy technicians at Rideout Memorial Hospital were transporting controlled substances between Rideout Health facilities with little or no security controls in place.

“Hospitals have a duty to ensure that controlled substances are not diverted for nonmedical use,” said U.S. Attorney Talbert. “When a pharmacy or hospital has record keeping problems, it is impossible to know exactly how many controlled substances are on hand. Without that knowledge, and without proper security controls, the potential for diversion into our community escalates and jeopardizes the public health and safety.”

“Healthcare providers are the gatekeepers of controlled substances in their possession,” said DEA Special Agent in Charge John J. Martin. “With prescription drug misuse rates alarmingly high, proper accountability and security reduces the opportunity for diversion to unintended users. DEA will continue to use every investigative tool available in response to the prescription drug epidemic.”

Since the investigation began, Rideout Health has worked with the DEA and the United States Attorney’s Office to develop a detailed compliance plan to address the deficiencies in Rideout Health’s handling of controlled substances. Rideout Health also took proactive steps to reorganize its Compliance Department to improve controls with respect to the purchase, storage and dispensing of controlled substances. The compliance plan with the DEA is designed to advance Rideout Health’s ability to meet its record keeping requirements and enhance its ability to detect and prevent drug diversion.

Assistant United States Attorneys M. Anderson Berry and Kurt A. Didier handled the case with assistance from Diversion Investigators from DEA’s Sacramento Field Office.


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