Consent Judgment — Konstantinos Zarkadas, No. CV-20-4310 (GRB)(SIL) (Dkt. 5, E.D.N.Y.)

Summary

A consent judgment in United States v. Zarkadas, Civil Action No. CV-20-4310 (GRB)(SIL) in the Eastern District of New York, resolves Controlled Substances Act claims brought on behalf of the Drug Enforcement Administration against Konstantinos Zarkadas, M.D. The government contends that from about December 2012 through April 2016 Zarkadas committed approximately 292 violations in distributing phentermine, a Schedule IV controlled substance, incorrectly recorded dates on approximately 71 occasions, and kept no initial or biennial inventory or receipt records from August 2012 through February 2015. Under its terms Zarkadas is to pay an $80,000 civil penalty within fourteen business days of the effective date, and the judgment becomes final only when all parties sign. It is neither an admission of liability nor a concession that the claims are not well founded.

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Full text

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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UNITED STATES OF AMERICA,
CONSENT JUDGMENT
Plaintiff, Civil Action
No. CV-20-4310 (GRB)(SIL)
-against-

KONSTANTINOS ZARKADAS,

Defendant.

------------------------------------------------------------X

This Consent Judgment is entered into between the United States of America, acting

through the United States Department of Justice and on behalf of the United States Drug

Enforcement Administration (“DEA”)(collectively the “United States”), and defendant

Konstantinos Zarkadas, M.D. (“Zarkadas” or “defendant”) (collectively referred to as “the

Parties”):

RECITALS

A. The United States contends that it has certain civil and administrative

claims against the defendant pursuant to the provisions of the Controlled Substances Act, 21

U.S.C. §§ 801 et seq. (“the CSA”), and its implementing regulations.

B. Specifically, as set forth more fully in the Complaint in this action, : 1)

from between in or about December 2012 through April 2016, the defendant committed

approximately 292 violations of 21 U.S.C. § 842 (a)(5) and C.F.R. §§ 1304.03 (b) and 1304.11 in

distributing phentermine, a Schedule IV controlled substance; 2) from between in or about April

2014 and February 2015, the defendant incorrectly recorded and entered dates in his records for

distribution of phentermine on approximately 71 occasions in violation of 21 U.S.C. § 827(a)(3)
United States v. Zarkadas, CV-20-4310 (GRB)(SIL) Consent Judgment of Settlement

and 21 C.F.R. §§ 1304.21(a) and 1304.22(b) and (c); and 3) the defendant did not maintain an

initial inventory, biennial inventory and failed to maintain records of the receipt of controlled

substances for the time period of August 2012 through February 2015 in violation of 21 U.S.C.

§ 827 (a)(1) and 21 C.F.R. § 1304.11 (collectively, “the Covered Conduct”).

C. This Consent Judgment is neither an admission of liability by Zarkadas

nor a concession by the United States that its claims are not well founded.

D. To avoid the delay, uncertainty, inconvenience, and expense of protracted

litigation of the above claims, and in consideration of the mutual promises and obligations of this

Consent Judgment, it is hereby agreed, by and between the United States, by its undersigned

attorney, and Zarkadas, both by himself and by his undersigned attorney, pursuant to 21 U.S.C.

§§ 842(a)(5) and (c)(1)(B)(i) and 843 (f), that this action is settled upon the following terms and

conditions:

Terms of Consent Judgment

1. Zarkadas shall pay the United States a civil penalty under the CSA of

Eighty Thousand dollars ($80,000) (the “Settlement Amount”), which shall be paid no later than

fourteen (14) business days after the Effective Date of this Consent Judgment. Payment of the

Settlement Amount shall be paid by electronic funds transfer in accordance with written

instructions from the Office of the United States Attorney.

2. Subject to the exceptions set forth in Paragraph 5 (concerning excluded

claims) herein, and conditioned upon Zarkadas’ timely full payment of the Settlement Amount

under this Consent Judgment, the United States releases Zarkadas from any civil or

administrative monetary claim the United States has for the Covered Conduct.

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3. In the event that the payment of the Civil Penalty Amount is reversed,

rescinded and/or ruled to be unlawful and/or wrongful by any court or administrative agency,

federal or state: (a) the United States may commence an action in district court for civil

penalties against Zarkadas for the Covered Conduct and Zarkadas agrees not to plead, argue

or otherwise raise any defenses to such an action under the theories of statute of limitations,

laches, estoppel, or similar theories of statute of limitations, laches, estoppel, or similar

theories, except to the extent that such defenses were available to Zarkadas on the date of the

United States' receipt of the payment.

4. This Consent Judgment in no way alters or restricts the United States'

right to enforce the CSA and regulations promulgated thereunder by commencing an

administrative or civil action against Zarkadas for any conduct that does not arise from the

Covered Conduct or that occurs after the Effective Date of this Consent Judgment.

5. The obligations imposed upon Zarkadas pursuant to this Consent

Judgment are in addition to, and not in derogation of, obligations imposed upon Zarkadas

pursuant to any federal, state or local law, including without limitation the CSA and the

regulations promulgated thereunder.

6. Notwithstanding the releases given in Paragraph 2 of this Consent

Judgment, or any other term of this Consent Judgment, the following claims of the United States

are specifically reserved and are not released:

a. Any liability arising under Title 26, U.S. Code (Internal Revenue Code);

b. Any criminal liability;

c. Except as explicitly stated in this Consent Judgment, any administrative
liability;

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United States v. Zarkadas, CV-20-4310 (GRB)(SIL) Consent Judgment of Settlement

d. Any liability to the United States (or its agencies) for any conduct other
than the Covered Conduct;

e. Any liability based upon obligations created by this Consent Judgment;

f. Any liability for express or implied warranty claims or other claims for
defective or deficient products or services, including quality of goods and
services;

g. Any liability for failure to deliver goods or services due;

h. Any liability of individuals.

7. Zarkadas fully and finally releases the United States, its agencies, employees,

servants, and agents from any claims (including attorneys' fees, costs, and expenses of every

kind and however denominated) which Zarkadas could have asserted, or may assert in the

future against the United States, its agencies, employees, servants, and agents, related to the

Covered Conduct, or arising from the United States’ investigation and resolution of claims

based upon the Covered Conduct.

8. Zarkadas waives and shall not assert any defenses he may have to any criminal

prosecution or administrative action relating to the Covered Conduct that may be based in whole

or in part on a contention that, under the Double Jeopardy Clause in the Fifth Amendment of the

Constitution, or under the Excessive Fines Clause in the Eighth Amendment of the Constitution,

this Consent Judgment bars a remedy sought in such criminal prosecution or administrative

action. Nothing in this paragraph or any other provision of this Consent Judgment constitutes an

agreement by the United States concerning the characterization of the Settlement Amount for

purposes of the Internal Revenue laws, Title 26 of the United States Code.

9. Zarkadas agrees to the following:

A. Unallowable Costs Defined: All costs (as defined in the Federal Acquisition

Regulation, 48 C.F.R. § 31.205-47; and in Titles XVIII and XIX of the Social Security Act, 42
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U.S.C. §§ 1395-1395kkk-1 and 1396-1396w-5; and the regulations and official program

directives promulgated thereunder) incurred by or on behalf of Zarkadas, his present or former

employees, and agents in connection with:

(1) the matters covered by this Consent Judgment;

(2) the United States’ audit(s) and investigation(s) of the matters covered by
this Consent Judgment;

(3) Zarkadas’s investigation, defense, and corrective actions undertaken in
response to the United States’ audit(s) and investigation(s) in connection
with the matters covered by this Consent Judgment (including attorney’s
fees); and

(4) the negotiation and performance of this Consent Judgment;
are unallowable costs for government contracting purposes and under the
Medicare Program, Medicaid Program, TRICARE Program, and Federal
Employees Health Benefits Program (FEHBP) (hereinafter referred to as
“Unallowable Costs”).

B. Future Treatment of Unallowable Costs: Unallowable Costs shall be separately

determined and accounted for by Zarkadas, and Zarkadas shall not charge such Unallowable

Costs directly or indirectly to any contracts with the United States or any State Medicaid

program, or seek payment for such Unallowable Costs through any cost report, cost statement,

information statement, or payment request submitted by Zarkadas to the Medicare, Medicaid,

TRICARE, or FEHBP Programs.

C. Treatment of Unallowable Costs Previously Submitted for Payment: Zarkadas

further agrees that within 90 days of the entry of this Consent Judgment he shall identify to

applicable Medicare and TRICARE fiscal intermediaries, carriers, and/or contractors, and

Medicaid and FEHBP fiscal agents, any Unallowable Costs (as defined in this Paragraph)

included in payments previously sought from the United States, or any State Medicaid program,

including, but not limited to, payments sought in any cost reports, cost statements, information

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United States v. Zarkadas, CV-20-4310 (GRB)(SIL) Consent Judgment of Settlement

reports, or payment requests already submitted by Zarkadas and shall request, and agree, that

such cost reports, cost statements, information reports, or payment requests, even if already

settled, be adjusted to account for the effect of the inclusion of the unallowable costs. Zarkadas

agrees that the United States, at a minimum, shall be entitled to recoup from Zarkadas any

overpayment plus applicable interest and penalties as a result of the inclusion of such

Unallowable Costs on previously-submitted cost reports, information reports, cost statements, or

requests for payment.

Any payments due after the adjustments have been made shall be paid to the United

States pursuant to the direction of the Department of Justice and/or the affected agencies. The

United States reserves its rights to disagree with any calculations submitted by Zarkadas on the

effect of inclusion of Unallowable Costs (as defined in this Paragraph) on Zarkadas’s cost

reports, cost statements, or information reports.

10. This Consent Judgment is intended to be for the benefit of the Parties only. The

Parties do not release any claims against any other person or entity.

11. Each Party shall bear its own legal and other costs incurred in connection with

this matter, including the preparation and performance of this Consent Judgment.

12. Each party and signatory to this Consent Judgment represents that it freely and

voluntarily enters into this Consent Judgment without any degree of duress or compulsion.

13. This Consent Judgment is governed by the laws of the United States. The

exclusive jurisdiction and venue for any dispute relating to this Consent Judgment is the United

States District Court for the Eastern District of New York. For purposes of construing this

Consent Judgment, this Consent Judgment shall be deemed to have been drafted by all Parties to

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this Consent Judgment and shall not, therefore, be construed against any Party for that reason in

any subsequent dispute.

14. The undersigned counsel represent and warrant that they are fully authorized to

execute this Consent Judgment on behalf of the persons and entities indicated below.

15. This Consent Judgment shall become final and binding only upon signing by

all parties hereto.

16. This Consent Judgment may be executed in one or more counterparts, each of

which shall constitute an original and all of which shall together constitute one and the same

Consent Judgment, and for purposes of this Consent Judgment, facsimile signatures shall be

treated as equivalent to originals.

17. This Consent Judgment is binding on Zarkadas’ successors, transferees, heirs, and

assigns.

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