HealthCare Fraud: Gottfried Kellermann Sentenced for Intentionally Violating Clinical Laboratory Improvement Amendments Regulations

Health Care Fraud
Gottfried Kellermann Sentenced for Intentionally Violating Clinical Laboratory Improvement Amendments Regulations

Osceola Nutritional Supplement Provider & CEO Sentenced

Madison, Wis. – Jeffrey M. Anderson, Acting United States Attorney for the Western District of Wisconsin, announced that Gottfried Kellermann, 76, Osceola, Wis., was sentenced today by U.S. District Judge James D. Peterson to a six-month period of home confinement, a $50,000 fine, and five years of probation, for intentionally violating Clinical Laboratory Improvement Amendments regulations. Kellerman’s co-defendant, NeuroScience, Inc., was sentenced to a five-year period of probation and a $140,000 fine for conspiring to defraud the United States. The defendants pleaded guilty to these charges on October 14, 2016.

Kellermann is the founder and CEO of NeuroScience and its sister company Pharmasan Labs. Pharmasan Labs conducted neurotransmitter testing, and NeuroScience recommended nutritional supplements to Pharmasan Labs patients based on the results of the testing. Pharmasan Labs’ neurotransmitter testing did not produce consistent results for patients, so Kellermann manipulated the results to normalize them, unbeknownst to federal regulators and the patients. Patients were told that their results were high or low based on an “optimal range” created by Kellerman, and this range identified 40% of patients as abnormal. NeuroScience recommended nutritional products to the patients identified as abnormal. The optimal range was not valid and was significantly narrower than the range required by federal regulators. Kellermann and his companies hid the range and that fact that it was not valid from federal regulators and from their patients.

The court admonished the defendants for their conduct. The court found that Kellermann was fundamentally unrepentant and that he had not embraced the fact that he and his companies engaged in conduct that was fundamentally wrong. Kellermann’s allocution, according to the court, showed that he was a self-deluded charlatan, and that the public needed to be protected from any potential future crimes of Kellermann and his companies. Lastly, the court commented that the root cause of NeuroScience’s conviction was Gottfried Kellermann’s actions to dissemble, lie, and conceal the un-validated testing practices. 

The court ordered several conditions of probation to protect the public and deter future conduct. Kellerman is prohibited from working at both Pharmasan and NeuroScience for five years. NeuroScience is required to notify its patients and its own employees of the conviction and the basis for the conviction. NeuroScience is also required to comply with the terms of a Corporate Integrity Agreement imposed by the U.S. Department of Health and Human Services, and is required to report periodically on its efforts to implement internal compliance controls mandated by the agreement. NeuroScience is additionally prohibited from employing Kellermann during the term of probation.

These charges were the result of an investigation conducted by the U.S. Department of Health and Human Services’ Office of Inspector General; IRS Criminal Investigation; Federal Bureau of Investigation; and the Department of Defense Office of the Inspector General – Defense Criminal Investigative Service. The prosecution of this case was handled by Assistant U.S. Attorneys Antonio M. Trillo, Daniel Hugo Fruchter, and Peter M. Jarosz.

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