U.S. and 5 States Add Firepower to Whistleblower’s Claims Against Insys Therapeutics, Marketer of Opioid Spray
Former Salesperson Sparked Prosecution of Kickback Scheme That Included Bogus Speaker Fees, Visits to Strip Clubs, Lavish Meals
‘SUBSYS’ Spray Implicated in More Than 900 Patient Deaths
WASHINGTON, D.C. (May 14, 2018) — The U.S. Department of Justice and five U.S. states have stepped into a previously secret lawsuit against Insys Therapeutics, Inc., revealing for the first time the central role played by whistleblower Maria Guzman in the government’s years-long pursuit of Insys for illegally marketing a dangerous opioid spray named SUBSYS. The resulting probe has led to a series of convictions, guilty pleas, and indictments of doctors and former Insys executives — including the company’s billionaire founder, John Kapoor, who was indicted in 2017 on federal racketeering charges.
The Employment Law Group® law firm filed the case in 2013 with close help from the Law Office of Mark Allen Kleiman, making it the earliest effective complaint against Insys (NASDAQ: INSY) under the federal False Claims Act and other laws for the company’s promotion of SUBSYS. The FCA encourages individuals to blow the whistle on fraud against U.S. taxpayers — in this case, via illegal reimbursement requests to Medicare and Medicaid — but keeps their lawsuits under wraps while prosecutors investigate the claims.
The complaint, now unsealed, was filed by The Employment Law Group on behalf of Ms. Guzman, a former Insys salesperson; on behalf of the U.S. government; and, as amended, on behalf of two dozen states and the District of Columbia. It laid bare a nationwide scheme by Insys to defraud Medicare and Medicaid by inducing doctors, via kickbacks that ranged from cash to favors to sex, to prescribe large doses of SUBSYS for federally insured patients who never should have received the drug, a form of fentanyl that’s designed to be sprayed beneath the tongue of people who suffer from extreme pain due to cancer. Using a mantra of “pain is pain,” Insys illegally pushed the prescription of SUBSYS for lesser “off-label” conditions such as back pain and migraines, according to the complaint. Ms. Guzman was fired in 2013 after objecting to the potentially deadly scheme.
Fentanyl is the generic name for a synthetic opioid that’s 50 times as potent as heroin, according to the U.S. Drug Enforcement Administration. SUBSYS has been named as a primary suspect in more than 900 deaths reported to the U.S. Food and Drug Administration over a five-year period, according to a recent analysis by The Palm Beach Post.
In federal court filings unsealed today, the U.S. government and five U.S. states said they would take over litigation of the major part of Ms. Guzman’s action, specifically including her claims against Insys for kickbacks; for off-label marketing of SUBSYS; and for false claims about patients’ conditions. Subject to a stay in the case, Ms. Guzman remains free to pursue her retaliation claim against Insys, as well as claims of individual liability against Mr. Kapoor and two other former Insys executives under the federal False Claims Act and its state equivalents. All three men already have been indicted on multiple counts of criminal conspiracy for the scheme that was outlined in the 2013 complaint.
The most recent version of the complaint, filed in 2016 by The Employment Law Group, alleges violations of federal law and local laws in 24 states plus the District of Columbia. California, Indiana, New York, North Carolina, and Virginia all have opted to become actively involved in the case, while most of the remaining states plus D.C. have said that Ms. Guzman may continue litigating on their behalf. A full list of the involved states, and their status in this case, is at the end of this press release.
The Justice Department intervened simultaneously in four other SUBSYS-related lawsuits filed under the False Claims Act. All four were filed after the initial complaint filed by The Employment Law Group. The FCA, originally signed into law by President Abraham Lincoln in 1863, makes it illegal to deceive the federal government for financial gain. In addition to steep penalties for violators, it includes a “qui tam” provision that allows whistleblowers to file a legal complaint on behalf of taxpayers and — if they prevail — to receive a share of the proceeds.
“Ms. Guzman is no longer the hidden hero of the Insys investigation,” said David L. Scher, a principal of The Employment Law Group. “Now everyone knows that she was an early warrior against fentanyl abuse, taking action to save lives long before ‘opioid crisis’ became a household phrase — even at the price of her own job.”
“All the way back in 2013,” Mr. Scher said, “our initial complaint provided more than 40 pages of details for prosecutors to start pursuing. Our firm worked with Ms. Guzman to provide concrete evidence and grand jury testimony to build criminal cases against several top executives. As the FBI said when Mr. Kapoor was indicted in 2017, ‘The allegations [against former Insys leaders] of selling a highly addictive opioid cancer pain drug to patients who did not have cancer, make them no better than street-level drug dealers.’ We look forward to seeing these people face justice.”
The second amended complaint in the case, which is available here, stands as a compelling account of Ms. Guzman’s experience at Insys. In addition to outlining a fraudulent scheme against taxpayers, it alleges that Insys was a sordid and discriminatory workplace for women.
The Employment Law Group worked closely on the case with The Law Office of Mark Allen Kleiman, based in Venice, Calif.; with Assistant United States Attorney John Lee of the Central District of California; and with David Cohen, Senior Trial Counsel at the Department of Justice in Washington, D.C.
United States ex rel. Guzman v. Insys Therapeutics, Inc.
No. CV 13-5861
U.S. District Court for the Central District of California, Western Division
Original complaint filed on August 12, 2013
Second amended complaint filed on June 13, 2016 (available here)
Intervened in part: United States, California, Indiana, New York, North Carolina, Virginia*
Declined to intervene: Delaware, District of Columbia, Florida, Georgia, Illinois, Louisiana, Massachusetts, Michigan, Montana, Nevada, New Hampshire, New Jersey, New Mexico, Oklahoma, Rhode Island, Tennessee, Texas, and Washington**
No decision so far: Hawaii, Minnesota
*The judge in the case consolidated all five SUBSYS-related actions, and Colorado intervened in part in the consolidated action. The state was not a party to Ms. Guzman’s action, however.
**Likewise, Connecticut, Iowa, Maryland, and Vermont declined to intervene in the consolidated action, and Maryland’s claims were dismissed as a result, but none of these states was named in Ms. Guzman’s action.
About The Employment Law Group
The Employment Law Group® law firm represents whistleblowers and other employees who stand up to wrongdoing in the workplace. Based in Washington, D.C., the firm takes cases nationwide.