Whistleblower case that convinced government to investigate Insys Therapeutics is publicly revealed for first time

WASHINGTON, May 15, 2018 /PRNewswire/ -- Documents unsealed in federal court yesterday reveal that a former sales representative in Florida for Insys Therapeutics Inc. filed in 2013 the first whistleblower lawsuit that convinced the federal government to start seriously investigating drugmaker Insys for its illegal sales and marketing practices to push doctors to prescribe Subsys, a highly addictive and dangerous synthetic opioid.

The former sales rep, Maria Guzman, is represented by Phillips & Cohen LLP and the Law Office of Mark Kleiman.

In her "qui tam" (whistleblower) lawsuit, which was not publicly known until today, Guzman provided the government with detailed information alleging overt and disguised bribes that Insys made to doctors to increase prescriptions of Subsys and the prescribed dosages and thinly veiled lies used to rationalize the off-label benefits for patients.

"Sex, money, luxury items – nothing was out of bounds in Insys's efforts to persuade doctors to prescribe Subsys without consideration of what was best for patients," Guzman said. "I could not keep silent, knowing how these off-label prescriptions endangered so many."

The federal district court in Los Angeles unsealed, and therefore made public for the first time, Guzman's lawsuit and other whistleblower lawsuits against Insys that were filed after Guzman's case. In connection with the unsealing of the qui tam cases, the US Department of Justice filed papers in court formally stating it was joining the whistleblower litigation along with a number of states.

Ms. Guzman and the government allege civil claims under the False Claims Act, which allows the government to recover up to three times the amount of money the government lost due to fraudulent claims plus civil penalties.

Since Guzman first filed her whistleblower case, the Justice Department has been pursuing criminal charges against Insys founder and majority owner John Kapoor and a number of former Insys executives and managers, including former CEO Michael Babich and former Vice President of Sales Alec Burlakoff, as well as a number of doctors.

Three of the doctors that Guzman's lawsuit says were top prescribers of Subsys and accepted kickbacks from Insys – Alabama doctors Xiulu Ruan and John Couch and Dr. Gavin Awerbuch of Michigan – have been convicted of criminal charges and sentenced to prison. The complaint states that Awerbuch wrote 1,283 prescriptions for Medicare patients alone from 2012 until he was arrested in May 2014, costing Medicare nearly $7 million.

Guzman was hired by Insys in January 2012 as part of the southeast region sales team, with her territory around West Palm Beach, Florida. After she complained about the company's tactics to persuade doctors to prescribe and overprescribe Subsys, Insys fired her in July 2013.

"Maria Guzman did a great public service for this country by exposing what Insys and these doctors were doing," said Erika Kelton, a whistleblower attorney and partner at Phillips & Cohen. "The horrible impact this opioid has on the lives of patients who do not need it was disregarded by Insys and the doctors who prescribed it unnecessarily."

Attorney Mark Kleiman added, "Our client's case is extremely important. With the information and assistance Ms. Guzman provided, those who have suffered from the terrible opioid crisis are getting some sliver of justice."

In her complaint, Guzman makes numerous allegations, including:

• Insys paid doctors thousands of dollars each in "speaking fees" for attending dinners that might have just one other person. The more Subsys prescriptions doctors wrote, the more money they were paid.
• Not only did sales team encourage sales, they encouraged doctors to prescribe much higher doses of Subsys than recommended by the FDA. Insys called this its "effective dosage" or "the kiss of death" message. Sales reps would tell doctors that 100 mcg – the dosage recommended by the FDA for initial treatment – was not effective for pain relief and push them to prescribe higher dosages, with the "magic number" being 800 mcg.
• After two Insys executives took a Florida doctor to a strip club and purchased two $500 private champagne room sessions for him, the doctor texted one of them, "Thank you for the best weekend in years!!!" then proceeded to write 17 prescriptions for Subsys in three days.
• Insys sales executives counseled sales reps on how to hide kickbacks to doctors. For instance, a regional sales manager told sales reps that he conspicuously placed a cooler filled with filet mignons by a doctor's desk during a sales call and told the doctor to "thank me later." To pay for expensive dinners for doctors and their spouses, he suggested sales reps go to a restaurant and ask them to charge them for 10 to-go lunches, but then request credit for the amount instead of the lunches and use that credit to cover dinner that night for a doctor and his/her spouse. Another suggestion was to order televisions to give to doctors through caterers for so-called "speaker programs."
• Insys offered doctors lucrative business deals and partnerships to motivate them to prescribe more Subsys prescriptions.
• Insys hired some female sales representatives based on their sex appeal and encouraged them to leverage that as a way to persuade doctors to write more prescriptions. In addition, the company hired relatives of doctors as another way to convince doctors to write more prescriptions.

Guzman's complaint alleges women faced rampant sexual harassment and a hostile work environment at Insys, where the executive team and board of directors were all men and there were very few female managers. This included obscene text messages.

The False Claims Act allows private individuals to sue companies that are defraing the government and recover damages on the government's behalf. Whistleblowers are provided job protection and are entitled to a share of the award, if funds are recovered. Companies found liable under the law can be required to pay three times the government's losses plus additional penalties.

About Phillips & Cohen
Phillips & Cohen is the nation's most successful law firm representing whistleblowers. The firm's cases have helped federal, state and local governments recover more than $12.3 billion in civil settlements and criminal fines. Phillips & Cohen represents whistleblowers in qui tam lawsuits as well as cases brought under the whistleblower programs of the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Internal Revenue Service. www.phillipsandcohen.com

SOURCE Phillips & Cohen LLP

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