KV Pharmaceutical ($KV.A) wants its money back. Now that ex-CEO Marc Hermelin has pleaded guilty to criminal charges related to his management of the Missouri company, KV has asked a St. Louis court for permission to cut him out of his retirement benefits and severance pay--and to order a refund of some of his compensation.
It's a long and tangled tale, but suffice it to say Hermelin was running the company at a time when it sold oversized pain pills. The company's pharma division was shut down, its subsidiary Ethex pleaded guilty to fraud, and, eventually, the Department of Health and Human services banned Hermelin from doing business with Medicare, Medicaid and other federal health programs for 20 years, the St. Louis Post-Dispatch reports.
KV now claims Hermelin made a bad situation worse by interfering with investigations and failing to fulfill obligations to the FDA. "Hermelin knew that many of his actions were improper, and that they risked severe sanctions against KV," the suit alleges (as quoted by the Post-Dispatch). "He acted solely to protect his own interests and bonus, which was, by contract, calculated as a percent of KV profit, so taking appropriate action would be costly to him." Hermelin has said he's owed his retirement benefits and should also be reimbursed for legal fees related to the criminal case against him.
- see the story from the Post-Dispatch