McEldrew Young Purtell Merritt Whistleblower Lawsuit Against INSYS Results in $225 Million Settlement of Allegations Involving Opioid Sales and Marketing Abuses

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INSYS Agrees to Global Resolution of Claims Arising from Separate DOJ Criminal and Civil Investigations

The Department of Justice announced that INSYS Therapeutics, Inc. (“INSYS”) has agreed to pay $225 million to resolve allegations that it paid kickbacks and engaged in other illegal marketing tactics to promote sales of its fentanyl spray, Subsys. According to the terms of the settlement, INSYS will pay a criminal fine of $2 million and forfeit $28 million. The pharmaceutical manufacturer will also pay $195 million to settle civil claims based on allegations in five different qui tam lawsuits filed by separate relators.

McEldrew Young Purtell Merritt represents one of the five relators, a former INSYS sales representative who became concerned as the drug manufacturer continually pushed the boundaries of its marketing tactics to boost sales of its powerful opioid painkiller. In 2016, McEldrew Young Purtell Merritt filed a complaint under seal on behalf the relator in the United States District Court for the Central District of California. The complaint included allegations that INSYS promoted Subsys for various off-label, or unapproved, uses including musculoskeletal pain, fibromyalgia, neck pain, and back pain, despite the fact that the FDA only approved the drug for the management of breakthrough cancer pain.

Allegations of Improper Dosing Instructions and Meddling with Insurance Authorizations

INSYS management allegedly directed its sales representatives to encourage physicians to prescribe Subsys for continuous use, rather than only as needed, and to start new patients at twice the starting dose permitted by the FDA-approved label. Sales representatives were also allegedly instructed to complete prior authorization forms on behalf of the patient or physician. They also provided physicians with an appeal letter template that would be filled out if patients could not obtain prior authorization from their insurer.

The TIRF REMS Access Program

INSYS allegedly employed other less subtle tactics to remove certain “obstacles” purposely set in place to control distribution of the dangerous class of fentanyl-based painkillers, such as Subsys. For example, the FDA requires that physicians and pharmacists enroll in a program known as the TIRF REMS (Transmucosal Immediate Release Fentanyl – Risk Evaluation and Mitigation Strategy) Access Program. The program was designed to reduce the risks of misuse, abuse, addiction, overdose and serious complications due to medication errors with the use of TIRF medicines. Prescribers and pharmacists must study educational materials and pass an online knowledge assessment exam is order to obtain certification.

In an effort to increase the number of prescribers in the TIRF REMS Access Program, INSYS sales representatives allegedly provided physicians with cheat sheets that contained all the correct answers to the knowledge assessment exam. The practice of distributing the test answers was allegedly considered commonplace among sales representatives. Physicians who allegedly received the cheat sheets could easily circumvent the educational requirement of the program which was intended to ensure that they had sufficient information to make informed risk-benefit decisions prior to starting a patient on a TIRF drug.

Allegations of Sham Speaker Programs and Other Physician Incentives

Much like a number of other pharmaceutical manufacturers, INSYS utilized “speaker programs,” which were purportedly intended to be educational programs through which physicians were paid to present medical information to their colleagues at lunch and dinner events. It was alleged that these events were, in reality, sham programs whose only purpose was to pay doctors and pharmacists to convince their peers to prescribe Subsys for various off-label uses.

According to allegations in the case, many of the speaking events were held at inappropriate locations, such as noisy restaurants and strip clubs, and were nothing more than a pretense to provide attendees with free food, alcohol, and monetary compensation. The alleged payment of bribes and kickbacks to attending prescribers was designed as a way to increase the number of Subsys prescriptions written, as well as the dosage of those prescriptions. Many physician-speakers allegedly received compensation without ever having provided any educational content whatsoever at these events.

Another form of illegal kickbacks allegedly involved the use of gift cards. INSYS management allegedly encouraged sales representatives to provide gift cards to physicians as an incentive to continue prescribing Subsys. Sales representatives allegedly employed covert techniques to conceal the details of the transactions involving the purchase of the gift cards. Under one such scheme, an INSYS sales representative would allegedly purchase gift cards at a local food establishment and persuade the store owner to create fraudulent receipts for the value of the purchase price of the gift cards. The doctored receipts would falsely reflect the purchase of coffee and other small food items which could permissibly be given to a physician’s office. The sales representative would allegedly submit the fraudulent receipts for reimbursement by INSYS and then directly give the gift cards as a form of illegal and untraceable kickbacks to the physicians who prescribed Subsys.

The Rochester Connection

As the manufacturer of Subsys, INSYS was only the first link in the chain of bad actors who allegedly put profit ahead of preventable harm to thousands of vulnerable patients. Rochester Drug Cooperative (“RDC”), the sixth largest distributor of pharmaceutical products in the country, was charged as a corporate entity with conspiring to distribute drugs, conspiracy to defraud the United States, and failing to file suspicious order reports.

Last month, the CEO of RDC signed a Deferred Prosecution Agreement (“DPA”) in connection with the pending charges against the company. Under the DPA and a related consent decree, RDC agreed to: 1) accept responsibility for its conduct by making admissions and stipulating to the accuracy of an extensive statement of facts; 2) pay a $20 million penalty; 3) reform and enhance its Controlled Substances Act compliance program; and 4) submit to supervision by an independent monitor. If RDC remains compliant with the DPA, the government will defer prosecution and seek to dismiss the charges after five years.

The recent charges against RDC stem from a two-year investigation by the Drug Enforcement Administration (“DEA”) after RDC violated the terms of a prior civil settlement. The disclosure of the prior investigation and resulting civil settlement came to light after RDC’s former CEO, Laurence Doud III, filed a lawsuit against the company last year. In the suit against RDC, Doud claims he was fired so that RDC could shift responsibility to him for the recent DEA criminal investigation.

Mr. Doud and RDC’s former chief compliance officer were both recently charged with conspiring to distribute drugs and defrauding the government. The indictments mark the first time that federal criminal charges have been brought against company executives for conspiring to illegally distribute opioids

Linden Care Specialty Pharmacy

In his lawsuit against RDC, Mr. Doud also alleged that two members of RDC’s executive team defamed him by asserting that he and BelHealth Investment Partners had an improper financial relationship. BelHealth Investment Partners is a private equity firm that acquired Linden Care LLC (“Linden Care”), a company that ran a now-defunct specialty pharmacy based in Woodbury, New York.

The recent investigation by the DEA was based, in part, on the inaccurate reporting, or lack of reporting, of pharmaceutical sales between RDC and Linden Care. Prior to going out of business, it is believed that Linden Care was one of the largest, if not the largest, distributors of Subsys in the nation.

McEldrew Young Purtell Merritt’s initial investigation of the allegations against INSYS identified the critical role that Linden Care played as the leading dispenser of Subsys throughout the country. The complaint filed by McEldrew Young Purtell Merritt on behalf of its client was the only one to name Linden Care as a defendant in the INSYS qui tam lawsuit. Although the case against INSYS has settled, McEldrew Young Purtell Merritt’s suit against Linden Care and Belhealth Partners is currently pending before the United States District Court for the Central District of California.

The False Claims Act

The INSYS case demonstrates the importance of whistleblowers in identifying and reporting fraud. Fraud against the government takes many forms, and employees and contractors are often in the best position to detect and report such conduct. The government simply doesn’t have the resources to identify and prosecute every instance of fraud. Consequently, many unscrupulous actors continue to defraud the government, and American taxpayers, for years without detection or prosecution.

The False Claims Act provides a monetary incentive to whistleblowers who provide original information. If the government makes a monetary recovery based on the information provided, a whistleblower can receive between 15 and 30 percent of the recovery. The False Claims Act also contains provisions that protect a whistleblower from retaliation by an employer.

If you have information about fraud against the government, the experienced attorneys at McEldrew Young Purtell Merritt can assist with all aspects of the process, from investigating your claim, filing a complaint, and successful recovery of a reward.

CFTC has New Boss: President Obama Taps Timothy Massad

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President Obama has selected Timothy Massad to succeed Gary Gensler as chairman of the Commodities Futures Trading Commission (CFTC).  Skeptics seem justifiably concerned about Massad’s ability and/or willingness to be tough with Wall Street banks.  As a Treasury Department Official, Massad oversaw the bailout of Wall Street’s biggest banks.  Prior to joining the Treasury Department, Massad was a partner at a New York law firm with strong ties to Wall Street.

Massad is now charged with holding wrongdoers on Wall Street accountable at a time when banks seem overrun with dishonest, unethical and scandalous behavior.  This job has become even more challenging as a result of budget concerns and massive fiscal deficits.  Hopefully, Mr. Massad will see the benefits associated with the CFTC working with whistleblowers to better focus scarce resources at serious wrongdoing.

McEldrew Young Purtell Merritt attorneys have represented clients in some of the nation’s largest qui tam cases for over a decade.  For a free confidential consultation, please call Eric L. Young, Esquire at (800) 590-4116 or complete the online form here. To learn more, read about our CFTC practice.

Electronic Health Records: A Prognosis for Missteps and Potential Fraud

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The Wall Street Journal recently reported that the Department of Veterans Affairs is in discussions with Apple to provide portable electronic health records (“EHRs”) to military veterans. The plan reportedly calls for Apple to develop specialized software tools that would allow veterans and their families to access their EHRs through Apple’s Health Records EHR data viewer. The proposed plan is intended to simplify and streamline health data access for patients visiting VA healthcare sites.

Former NBA Great Lucius Allen Blows the Whistle on Bristol-Myers Squibb

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As reported by the Los Angeles Times here, California Insurance Commissioner Dave Jones announced Friday that his office had joined a previously sealed whistleblower lawsuit against the company, calling it the largest health insurance fraud case ever pursued by a California state agency.

Two of the three whistleblowers in the case are former Lakers player Lucius Allen and his wife, Eve, who worked for the drug company as employees and provided access to the basketball team, whose players participated in “Lakers Dream Camps” set up by the drug company for doctors and their family members, the lawsuit said. The lawsuit was filed in 2007 but was sealed until the state joined the case recently.

New York-based Bristol-Myers Squibb issued a statement: “Bristol-Myers Squibb believes this lawsuit has no merit and the company will defend itself vigorously.”

The case is the latest major legal action against Bristol-Myers Squibb over allegations of health care fraud. The pharmaceutical giant paid $515 million in 2007 to settle allegations by the federal government and other states that it used a kickback scheme to defraud the Medicare and Medicaid insurance programs, officials said.

The California lawsuit alleges that Bristol-Myers Squibb targeted the private insurance industry, making thousands of payments to “high prescribing doctors” who wrote prescriptions for its well-known drugs, including Plavix, Abilify and Pravachol.

Jones said that insurance companies in California had spent more than $3.5 billion to cover the costs of the drugs Bristol-Myers Squibb sought to promote through its kickback scheme.

“We need to be sure that doctors are prescribing drugs because those drugs are best for their patients and not because a pharmaceutical company provided doctors with trips and kickbacks,” Jones said. “These illegal practices drive up the cost of health insurance for millions of Californians.”

This is just another example of pharma companies illegally utilizing a “pay-to-play” strategy. The concept is simple, pay doctors and they will write scripts for our drugs. The concept is clearly illegal, drains taxpayer funds and most importantly creates serious patient harm issues. When choosing which drug to prescribe, the doctor’s primary concern should be the patients’ health and not the doctor’s bottom line!

McEldrew Young Purtell Merritt represents whistleblowers nationwide. For a free confidential consultation, please call Eric L. Young, Esquire at (215) 367-5151 to speak to one of our whistleblower lawyers.

Reminder: CA and IL Allow Insurance Fraud Whistleblowers

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The majority of work we do for whistleblowers reporting health care fraud involves cases of fraud against the US Government’s Medicare and Medicaid programs under the False Claims Act. However, a recent press release from an attorney settling a case in California reminds us that there are two states which allow private citizens to bring claims of insurance fraud on behalf of the state’s citizens: California and Illinois.

Pharmacy and Drug Fraud: A Prescription for Imprisonment and Big Fines

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A number of civil settlements and criminal convictions involving pharmacy and drug fraud in 2018 have highlighted a longstanding problem that imperils patient health and burdens American taxpayers with costs measured annually in the millions of dollars. Pharmacy and drug fraud takes many different forms and can involve everyone in the supply chain from small pharmacy operators to large pharmaceutical distributors.

Unnecessary Drug Testing & Kickbacks Cost Millennium Health $256 Million

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One of the nation’s largest urine drug testing laboratories settled a False Claims Act lawsuit today to resolve allegations that it billed Medicare and Medicaid fraudulently for unnecessary services and referrals influenced by kickbacks. In the settlement, Millennium Health (formerly Millennium Laboratories) agreed to pay $256 million. It appears that the company is going to enter Chapter 11 bankruptcy and shareholders are going to make an initial payment of $50 million toward the settlement.

The company agreed to pay $227 million to resolve allegations under the False Claims Act. The FCA is the government’s leading tool against fighting spending as a result of fraud. It provides for treble damages and has been used in the past few years to recover billions of dollars lost to health care fraud. It rewards whistleblowers with payments of between 15 and 30 percent of the amount recovered by the US Government.

Millennium was accused of misrepresenting the need for expensive testing to doctors by encouraging them to setup custom profiles which in fact became standing orders for additional testing that occurred without regard to individual patient need. Medicare prohibits the billing of services which are not reasonable and medically necessary.

Millenium also offered gifts (test specimen cups) to physicians to boost their testing referrals, according to the U.S. Government. I haven’t looked at the procedural history of the case in the context of the False Claims Act, but the specimen cup issue may have been brought to light by an antitrust lawsuit originally filed by one of its competitors. The Department of Justice weighed in on that case after the start of its investigation to say that the free testing cups were a violation of the Stark Law and Anti-Kickback Statute.

Ten million of the settlement amount covered a separate whistleblower lawsuit brought by a healthcare provider in Florida which reported the company for unnecessary genetic testing performed without regard to patient need.

The San Diego-based company has been under investigation since 2012. The settlement is another example of the Justice Departments ongoing pursuit of diagnostic testing companies. Earlier this year, another laboratory (Health Diagnostics Laboratory) settled allegations that it paid physicians improperly for the referral of blood sample testing. Health Diagnostics claimed that the payments were a reasonable amount for the work performed by the doctor.

An article in the Wall Street Journal in 2014 discussed the explosion of annual Medicare payments for high tech testing of urine for drugs. In 2007, less than $50 million was spent on such tests. In 2013, Medicare spent more than $600 million on the monitoring of patient treatment for pain and substance abuse. With the tremendous explosion of payments in this area, it is no surprise that the U.S. Government is looking into improper payments in this area aggressively.

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Novartis Reports $390 Million Settlement in Kickback Case

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Novartis has reportedly agreed in principle with the Department of Justice to settle a whistleblower lawsuit brought under the False Claims Act for $390 million. The complaint filed by the DOJ in 2014 alleges that the company paid kickbacks to specialty pharmacies for prescriptions involving Myfortic and Exjade. The whistleblower filed the complaint informing the Justice Department of the potential fraud in early 2012 following the company’s $420 million settlement with the government in 2010.

Sobering News of Fraud in the Addiction Treatment Industry

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Sobering News of Fraud in the Addiction Treatment Industry

The opioid epidemic has exacted an immeasurable cost on our country in both human and financial costs. It has also given rise to a new type of health care scam in America – addiction treatment fraud. Unscrupulous operators of drug treatment centers and sober homes are preying on people in desperate need of drug treatment services while also defrauding American taxpayers out of tens of millions of dollars annually.

Is Telemedicine Fraud in our Future?

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A bipartisan group of members of the U.S. House of Representatives introduced a bill to expand Medicare coverage of telehealth services this month. Telemedicine is expected to be the wave of the future, with the growth in home health technologies ramping up globally from 14.3 million in 2014 to 78.5 million in 2020 according to Tractica, a digital health advisory service. However, if there aren’t adequate checks and balances in the system to prevent fraud, the costs to the system could easily overwhelm any cost savings and efficiency benefits to the new method of treating patients.

Medicare currently pays for telehealth services provided by certain practitioners to individuals in certain rural areas or counties outside of a Metropolitan Statistical Area. The Medicare Telehealth Parity Act of 2015 would expand the list of eligible providers and removes geographic barriers. The bill would move the system to parity between telehealth and in-person services in three phases.

If Medicare isn’t careful, this could make committing health care fraud easier for doctors that want to game the system. How much easier would it be for doctors to claims reimbursement for services rendered if they don’t even have to have patients come into the office?

The U.S. loses billions every year to Medicare fraud already. In 2012, an FBI report estimated the amount lost at between 3 and 10 percent of all health care expenditures. Every year, the U.S. recovers a couple billion in fraudulent payments thanks to whistleblowers, their attorneys, the Department of Justice and the False Claims Act. But that’s still a drop in the bucket compared to the amount lost.

On the other hand, the recording of the telecommunication sessions could permit better review of the bills provided by health care providers. The problem is simply one of scale. There may not be a way for the government to review the sessions from every provider for fraud. Ultimately, the question is whether more providers will try to take advantage of the new system and how many will slip through the cracks.

Telemedicine is coming. There are a lot of initiatives that advance the ball on it. The 21st Century Cures Act just passed the House last week. But the version of the bill that passed only calls for Medicare to study whether care may be improved by expanding telehealth services and does not call for the expanded reimbursement of services rendered through telemedicine. Another potential bill introduced in previous sessions, the Telehealth Advancement Act, would extend Medicare coverage in remote areas and strengthen the broadband communication infrastructure there to allow the services to take place.

We should figure out how to prevent the fraud that plagues the current system from expanding to include it as well. Otherwise, we will need more whistleblowers.

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