Stericycle Agrees to Over $56 Million Resolution in Federal Controlled Substance Handling Investigation

Stericycle Inc., an international medical waste management company headquartered in Lake Forest, Illinois, has entered into criminal and civil agreements totaling more than $56 million following federal investigations into the company’s handling of controlled substances intended for disposal between 2015 and 2020.

Federal prosecutors in the Eastern District of California announced that Stericycle agreed to resolve parallel criminal and civil investigations tied to failures involving controlled substance transportation, storage, reporting, security, and diversion prevention procedures connected to the company’s pharmaceutical waste disposal operations.

Stericycle operated as a DEA-registered reverse distributor responsible for receiving expired, unusable, or unwanted controlled substances from pharmacies, hospitals, clinics, and healthcare providers before transferring the materials for destruction.

According to federal filings, Stericycle transported controlled substances through a nationwide network of facilities, including dozens of locations that were not registered with the Drug Enforcement Administration despite handling regulated pharmaceuticals. Federal investigators stated the company’s transportation and storage network created repeated vulnerabilities involving accountability, inventory tracking, and diversion prevention.

Court documents stated that controlled substances were repeatedly moved through more than sixty unregistered facilities across the country in violation of federal regulatory requirements tied to DEA registration, secure storage, transportation procedures, and destruction timelines.

Federal investigators stated that some facilities lacked adequate security protections required under the Controlled Substances Act, including failures involving storage safeguards, surveillance systems, inventory controls, and transportation monitoring. Prosecutors further stated that controlled substances were sometimes stored in unsecured trailers, fenced yards, public storage areas, and vehicles without sufficient safeguards to prevent theft or diversion.

The investigation also uncovered repeated failures to report thefts and significant losses of controlled substances to the DEA as required by federal regulations. Federal prosecutors charged Stericycle with conspiracy to defraud the United States under 18 U.S.C. § 371.

According to court filings, investigators determined Stericycle lacked a reliable package tracking system across portions of its transportation network, creating opportunities for diversion and loss of controlled substances moving between facilities. Federal records further stated that multiple executives and managers were aware of tracking deficiencies and security concerns tied to the company’s transportation operations.

Federal investigators documented multiple diversion incidents across several states, including Alabama, Tennessee, Arizona, Michigan, and Texas. Court records describe thefts involving controlled substances, missing pharmaceutical shipments, tampered containers, unsecured storage conditions, and failures to file federally required DEA Form 106 reports documenting thefts or significant losses.

One federal filing described an incident in Bristol, Tennessee, where a Stericycle SPAK driver transporting controlled substances was involved in a multi-vehicle crash while under the influence of controlled substances. Investigators recovered approximately 1,000 pills from the driver’s truck and person during the investigation.

The criminal portion of the agreement includes a Deferred Prosecution Agreement requiring Stericycle to pay approximately $19.08 million in criminal penalties while maintaining compliance oversight, corporate reforms, reporting requirements, and cooperation obligations with the Department of Justice.

Separately, the company agreed to pay approximately $37.81 million to resolve civil liability tied to violations of the Controlled Substances Act involving registration, security, recordkeeping, transportation, and reporting failures.

Federal prosecutors stated the Deferred Prosecution Agreement includes mandatory compliance reforms, independent oversight measures, employee training requirements, internal investigative procedures, and expanded reporting obligations tied to controlled substance handling operations.

DEA San Francisco Field Division Special Agent in Charge Bob P. Beris stated the investigation revealed conduct extending beyond administrative violations, stating that controlled substances were stolen, diverted, misused, and introduced into communities due to breakdowns in security and compliance systems.

FBI Sacramento Special Agent in Charge Sid Patel stated that controlled substance regulations exist specifically to prevent dangerous pharmaceuticals from entering illegal distribution channels and to protect the public from diversion-related risks.

Federal prosecutors stated the criminal resolution does not provide immunity or criminal release protections for individuals connected to the underlying conduct investigated during the case.

The Drug Enforcement Administration and the Federal Bureau of Investigation conducted the investigation.

Assistant U.S. Attorneys Michael D. Anderson and Adrian T. Kinsella prosecuted the criminal matter. Assistant U.S. Attorney David E. Thiess assisted with the civil settlement proceedings.

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U.S. Attorney’s Office, Eastern District of California — Stericycle civil settlement agreement and statement of facts. (Free Download)

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United States v. Stericycle, Inc. — Federal criminal information filed in the Eastern District of California outlining conspiracy allegations under 18 U.S.C. § 371. (Free Download)

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United States’ Pre-Hearing Brief — Deferred prosecution agreement proceedings, criminal penalty calculations, compliance requirements, and investigative background. (Free Download)

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