Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 1 of 139 Page ID #:371 20lfrJUN 13 PH 1:27 1 DavidL.Scher,Esq. tt ,, 1 • ,.'fRiCTceiu·,·i dCsc ?:r~emploNymen t 1aw group.com ec,n 1-~ ~ ,c.,u,. 2 a1110mmBar o. 184 562 · 3 R. Scott Oswald, Esq. (to be admitted]jhrlrav ;•. l,4--,~· soswald@employmentlawgroup.com ./ 4 The Employment Law Group, P.C. 5 888 17th Street, NW, Suite 900 6 Washington, D.C. 20006 (202) 261-2806 7 (202) 261-2835 (facsimile) 8 Mark Kleiman, Esq. Law Office of Mark Allen Kleiman 1O mkleiman@quitam.org 2907 Stanford A venue Venice, California 90292 310-306-8094 9 IN THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA \VESTERN DIVISION CASE NO.: CV 13-5861 GHK(AJWx) Plaintiff, 20 v. 21 22 23 24 25 26 27 28 [UNDER SEAL], SECOND AMENDED COMPLAINT FOR VIOLATIONS OF THE FEDERAL FALSE CLAIMS ACT AND STATE FALSE CLAIMS ACTS Defendants. FILED UNDER SEAL (Pursuant to 31 U.S.C. § 3729 False Claims Act) JURY TRIAL DEMANDED ') 2 of 139 Page ID #:372 Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page ... David L. Scher, Esq. dscher@employmentlawgroup.com 2 California Bar No. 184562 3 R. Scott Oswald, Esq. (to be admittedpro hac vice) soswald@employmentlawgroup.com 4 The Employment Law Group, P.C. 5 888 17th Street, NW, Suite 900 6 Washington, D.C. 20006 (202) 261-2806 7 (202) 261-2835 (facsimile) 1 8 Mark Kleiman, Esq. Law Office of Mark Allen Kleiman 1o mkleiman@quitam.org 2907 Stanford Avenue 11 Venice, California 90292 12 310-306-8094 9 u Ir) ~ 00 - ~o .,..0 = C'J C. 0\ 0 \0 Q) \0 0 C'J 13 .-<;:::: 0 ::I 0 1-,c C., tZl ~ N ~ . =~~ ~ZCl .... =~ A a .t:i i ~ ~ Q) ~ 0 ..... r/.) ..... .s ,B ~ C. I:'-- a-~ r-1 gg ~ 00 -= E-4 (13 N 0 N ~ 14 • 15 ~ IN THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION ~ 00 00 16 - 11 0 N 18 C'J ~ ~ c--i ..i::l ~ I [UNDER SEAL], 19 20 Plaintiff, v. 21 22 23 [UNDER SEAL], CASE NO.: CV 13-5861 GHK(AJWx) SECOND AMENDED COMPLAINT FOR VIOLATIONS OF THE FEDERAL FALSE CLAIMS ACT AND STATE FALSE CLAIMS ACTS Defendants. FILED UNDER SEAL (Pursuantto 24 25 26 . 31 U.S.C. § 3729 False Claims Act) JURY TRIAL DEMANDED 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAlNT UNDER SEAL 1 CASENo. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW ) Document 33 Filed 06/13/16 Page ) 3 of 139 Page ID #:373 1 David L. Scher, Esq. dscher@employmentlawgroup.com 2 California Bar No. 184562 3 R. Scott Oswald, Esq. (to be admitted pro hac vice) soswald@employmentlawgroup.com 4 The Employment Law Group, P.C. 5 888 17th Street, NW, Suite 900 6 Washington, D.C. 20006 (202) 261-2806 7 (202) 261-2835 (facsimile) 8 Mark Kleiman, Esq. Law Office of Mark Allen Kleiman 1O mkleiman@quitam.org 2907 Stanford A venue 11 Venice, California 90292 12 310-306-8094 9 u tr) (") 00 - ~o C'J "0 =.t:: i::i. 0\ \0 0 Q) lSCll No ;:::1 ~ \0 0 0 ~ C'J 13 N . ~ ~ ~ ~zo .... = ~ s:: a :E i ~ ~ Q) >, Cl) Jj .s ~ i::i. r--- a-~ gg ~ ~ 00 -= ~ ~ 0 rr., ell 0 N ~ J;I.. • 14 15 (") 00 00 - C'J (") (") N 0 N ..cl P-s 16 IN THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION 17 UNITED STATES OF AMERICA ex rel 18 MARIAGUZMAN, 19 20 STATE OF CALIFORNIA ex rel 21 MARIA GUZMAN, 22 23 STATE OF DELA WARE ex rel 24 MARIA GUZMAN, 25 CASE NO.: CV 13-5861 GHK(AJWx) SECOND AMENDED COMPLAINT FOR VIOLATIONS OF THE FEDERAL FALSE CLAIMS ACT AND STATE FALSE CLAIMS ACTS FILED UNDER SEAL (Pursuant to 31 U.S.C. § 3729 False Claims Act) JURY TRIAL DEMANDED 26 DISTRICT OF COLUMBIA ex rel 27 MARIA GUZMAN 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 2 CASE No. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page ) 4 of 139 Page ID #:374 1 STATE OF FLORIDA ex rel 2 MARIA GUZMAN, 3 4 STATE OF GEORGIA ex rel 5 MARIA GUZMAN, 6 7 STATE OF HAWAII ex rel 8 MARIA GUZMAN, 9 10 STATE OF ILLINOIS ex rel u Ir) M 00 ~o ...o ~ =.t:: Q., 0\ .--< \0 (1.) ~ ~~ ~ ~ ...... = ts ~ ~ Q ~ ~ 0 a;..,..W !:l bl) .S (1.) 12 \0 0 0 - CJ'.} :::s0N c.!) 0 11 MARIA GUZMAN, .s ,B 13] Cl.cr-- ro ~ N 0 N ~ µ., • 13 STATE OF INDIANA ex rel 14 MARIA GUZMAN, 15 M 00 00 ~ .--< =-~ M M N 16 STATE OF LOUISIANA ex rel 17 MARIA GUZMAN, ~ 00 00 ~ 00 0 N 18 E-4 ~ i:i.. 19 COMMONWEALTH OF -= 20 MASSACHUSETTS ex rel 21 MARIA GUZMAN, 22 23 STATE OF MICHIGAN ex rel 24 MARIA GUZMAN, 25 26 STATE OF MINNESOTA ex rel 27 MARIA GUZMAN, 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 3 CASENo. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 5 of 139 Page ID #:375 1 STATE OF MONTANA ex rel 2 MARIA GUZMAN, 3 4 STATE OF NEVADA ex rel 5 MARIA GUZMAN, 6 7 STATE OF NEW HAMPSHIRE ex rel 8 MARIA GUZMAN, 9 10 STATE OF NEW JERSEY ex rel u ~o l(') M 00 - C'1 ...o ~ 0\ = \0 (l) 0 0 -~ 0 - CZ2 ::s0N C!) ~ ~ N C'i . =~ ~ a .1:1i >. ~ ~ (l) ~ 0 CZ} ..... 0 ..i::: ..i::: - ~ t-- a-~ gg ~ ~ 00 -= E-- 12 \0 ~ ~ ~ ~ZO ...... 11 MARIA GUZMAN, 00 cd 13 STATE OF NEW MEXICO ex rel 0 N ~ µ.. 14 MARIA GUZMAN, • 15 - 16 STATE OF NEW YORK ex rel M 00 00 C'1 M M C'i 0 N ..i::i i:i... 17 MARIA GUZMAN, 18 19 STATE OF NORTH CAROLINA ex rel 20 MARIA GUZMAN, 21 22 STATE OF OKLAHOMA ex rel 23 MARIA GUZMAN, 24 STATE OF RHODE ISLAND ex rel 25 26 MARIA GUZMAN, 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 4 CASENo. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 6 of 139 Page ID #:376 1 STATE OF TENNESSEE ex rel 2 MARIA GUZMAN, 3 4 STATE OF TEXAS ex rel 5 MARIA GUZMAN, 6 7 COMMONWEALTH OF VIRGINIA 8 ex rel MARIA GUZMAN, 9 10 STATE OF WASHINGTON ex rel u lf) (') 00 ~o =.t:: 0 0 - CZl :::s0N c.!) 0 12 N 13 N 14 V. \0 Q) ~ ~ . ~~~ ~zo ..... = d) ~ ~ ~ 0 N 0 ~ µ.. • >, 0 Q) .l:l bJ) 00 (') C": N ~ 0 00 -= ~ 00 00 ..c::..i:::: C"! ..... ~ (') CZ} i::i. t--- "' Plaintiff, 15 = .s 16 17 =-~ gg 18 ~ - - C"! "0 i::i. OI \0 11 MARIA GUZMAN, N ..i::l A.. INSYS THERAPEUTIC, INC.; MICHAEL BABICH, an Individual; ALEC BURLAKOFF, an Individual; 19 JOHN N. KAPOOR, an Individual; 20 and DOES 2 through 15, 21 22 Defendants. 23 24 25 26 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 5 CASENo. CV 13-5861 GHK (AJWX) '~ Case 2:13-cv-05861-JLS-AJW ) Document 33 Filed 06/13/16 Page ) 7 of 139 Page ID #:377 1 TABLE OF CONTENTS 2 PAGE 3 4 INTRODUCTION ...................................................................................................... 1 5 6 7 8 JURISDICTION AND VENUE ................................................................................ 3 PARTIES .................................................................................................................... 4 FACTUAL ALLEGATIONS .................................................................................... 7 9 10 Work History and INSYS's Hiring Strategies ................................................. ? 11 The INSYS Business Model and Kickbacks to Doctors ............................... 12 12 13 14 15 Kickbacks and Speaker Programs ................................................................. 14 Strip Clubs, Shooting Ranges, Meals, and Referrals ..................................... 17 Hiring a Doctor's Significant Other Family Member, or Friend ..................22 16 17 Burlakoff Offered Physicians Lucrative Business Deals and Partnerships ...24 18 Instructions for Avoiding Anti-Kickback Standards ..................................... 24 19 20 21 22 23 24 25 26 27 SUBSYS's Indication and Usage, and INSYS's Off-Label Marketing ........27 The IRC and Prior Authorization .................................................................. 33 Instructing Sales Representatives to Market for Off-Label Uses ..................34 Targeting Doctors Who are Not Oncologists or Pain Specialists .................38 INSYS 's Off-Label Marketing Results in Doctors Prescribing SUB SYS For Contraindications, Off-Label Use, and Over Titrating .......................... .40 Prescriptions for Contraindications .............................................................. .41 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL CASENo . . CV 13-5861 GHK (AJWX) ') 8 of 139 Page ID #:378 Case 2:13-cv-05861-JLS-AJW) Document 33 Filed 06/13/16 Page 1 Prescriptions for Off-Label Uses .................................................................. .42 2 Falsification of Documents to CMS ............................................................. .45 3 Switching Patients from Atiq Indicates the Large Number of Medicare and Medicaid Patients being Prescribed SUBSYS ....................................... .46 4 5 Titration and Over-Prescribing ..................................................................... .48 6 7 COUNT I: False Claims Act Violations .................................................................. 52 8 9 COUNT II: Off-Label Dissemination Violations .................................................... 55 10 COUNT III: Medicaid Non-Approved Use Violations ........................................... 57 11 COUNT IV - Medicare Non-Approved Use Violations .......................................... 59 12 13 COUNT V - Violation Of The California False Claims Act 1265l(a)(l) ..............62 14 COUNT VI - Violation Of The California False Claims Act (1265l(a)(2) ............64 15 16 COUNT VII - Violation Of The California False Claims Act (1265l(a)(3) ...........65 17 COUNT VIII - Violation Of The California False Claims Act (12651(a)(7) .........66 18 19 20 21 COUNT IX- Delaware False Claims And Reporting Act ("DFCA") ....................67 COUNT X - District Of Columbia False Claims Act.. ............................................ 69 COUNT XI - Violation Of The Florida False Claims Act ...................................... 71 22 23 COUNT XII - Violation Of The Georgia False Medicaid Claims Act.. ..................73 24 COUNT XIII - Hawaii False Claims Act ................................................................ 74 25 26 27 COUNT XIV - Illinois Whistleblower Reward And Protection Act.. ..................... 75 COUNT XV - Violation Of The Indiana False Claims Act .................................... 77 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL II ·-- ------~ ,~~ CASENO.. CV 13-5861 GHK (AJWX) ) 9 of 139 Page ID #:379 Case 2:13-cv-05861-JLS-AJW) Document 33 Filed 06/13/16 Page 1 2 3 4 COUNT XVI - Violation Of The Louisiana Medical Assistance Programs Integrity Law ........................................................................................... 79 COUNT XVII - Violation Of The Massachusetts False Claims Act.. .....................84 COUNT XVIII - Violation Of The Michigan Medicaid False Claims Act.. ...........85 5 6 COUNT XIX - Violation Of The Minnesota False Claims Act .............................. 87 7 COUNT XX - Violation Of The Montana False Claims Act .................................. 89 8 9 COUNT XXI - Violation Of The Nevada False Claims Act.. ................................. 91 10 COUNT XXII - Claims Of The State Of New Hampshire Violation Of The New 11 Hampshire False Claims Act.. .................................................................................. 92 12 COUNT XXIII - Violation Of The New Jersey False Claims Act.. ........................94 13 14 COUNT XXIV - Violation Of The New Mexico Medicaid False Claims Act And The New Mexico Fraud Against Taxpayers Act.. ..................................... 97 15 16 COUNT XXV - Violation Of The New York False Claims Act.. ........................... 99 17 COUNT XXVI - Violation Of The North Carolina False Claims Act.. ................ 101 18 19 20 21 COUNT XXVII - Violation Of The Oklahoma False Claims Act. ................. 103 COUNT XXVIII - Violation Of The State False Claims Act (Rhode Island) ...... 106 COUNT XXIX - Violation Of The Tennessee Medicaid False Claims Act ......... 108 22 23 COUNT XXX - Violation Of The Texas Medicaid Fraud Prevention Act.. ......... 110 24 COUNT XXXI - Violation Of Virginia Fraud Against Taxpayers Act ................ 114 25 26 COUNT XXXII - Violation Of The Washington State Medicaid Fraud False Claims Act .......................................................................................... 116 27 28 COUNT XXXIII- Illegal Retaliation in Violation of Federal False Claims Act. .118 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL III CASENO.. CV 13-5861 GHK (AJWX) ! ) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page ) 10 of 139 Page ID #:380 1 2 3 4 COUNT XXXIV - Illegal Retaliation in Violation of Florida False Claims Act. .. 119 COUNT XXXV - Illegal Retaliation in Violation of Public Policy ...................... 120 PRAYER FOR RELIEF ......................................................................................... 121 5 6 DEMANDFORJURYTRIAL ......................................................... 124 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL IV CASENo .. CV 13-5861 GHK (AJWX) .) Document 33 Filed 06/13/16 Page Case 2:13-cv-05861-JLS-AJW ) 11 of 139 Page ID #:381 Introduction 1 2 1. Qui tam relator Maria Guzman ("Guzman"), by her attorneys, 3 4 individually and on behalf of the United States of America, files this complaint 5 against INSYS Therapeutics, Inc. ("INSYS") to recover damages, penalties, and 6 7 8 9 attorneys' fees for violations of the federal False Claims Act, 31 U.S.C. §§ 3729 et seq., ("FCA" or "False Claims Act"). 2. INSYS instituted a kickback-fueled off-label marketing campaign to 10 u 0 ~~ ~ ~ '° ~ '° 12 ON 13 .. 14 =.t:: o C"ic,a ~ ~ 0 0 ~ ~~u ~ . ~ ~ Q µ., .., ..... ~ i::f • =0o('r) ~ a -1= ~ oo §~~~ 0 t'- 00 i::i..r--- ro ('r) ~ <": a ...... ~ gg ~ ~ oo 11 induce doctors to prescribe INSYS 's drug SUB SYS, a powerful opioid agonist drug that stimulates activity at opioid receptors in the central nervous system normally stimulated by naturally occurring opioids. SUBSYS is a fentanyl product, in the 15 opioid agonist family with such other drugs as morphine, oxycodone, and heroin. As 16 a result of the off-label campaign and egregious financial kickbacks, SUBSYS is 17 8 N 18 being marketed and prescribed far beyond its stated indication, which is limited to f 19 breakthrough cancer pain only, at a beginning dosage of 100 micrograms. 20 21 22 3. The FDA has contraindicated SUBSYS for several uses due to the risk of overdose and requires enrollment in a special program in order to prescribe this 23 24 25 26 potent and addictive drug. INSYS's off-label campaign, which includes the kiss of death message, which encourages doctors to quickly titrate patients, has resulted in at least one pharmacist contacting the relator to ask her to return a patient to a lower, 27 28 safer dosage. INSYS off-label marketing and financial inducements have been SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 1 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW\) Document 33 Filed 06/13/16 Page ) 12 of 139 Page ID #:382 1 successful as many doctors write SUBSYS for contraindicated and off-label uses in 2 Medicare and Medicaid patients, including for postoperative pain and back pain, 3 4 5 6 7 8 9 which is counter to FDA warnings of respiratory failure and death. INSYS also utilizes a mail order pharmacy that sends SUBSYS to patients who had not requested the drug and that does not properly instruct patients on the storage of SUBSYS, which can lead to children fatally ingesting the drug. 4. INSYS instituted programs throughout the country to induce doctors to 10 11 prescribe SUBYS over those of competitors by means of monetary payments, trips to 12 strip clubs and shooting ranges, stock options, hiring physician's significant others, 13 14 15 16 and expensive meals in violation of federal anti-kickback laws. One physician, Dr. Stuart Krost, was promised a $100,000 payment for this "support with SUBSYS" and INSYS spent $58,000 on meal expenses for doctors in just one month. INSYS, 17 18 focusing on increasing its market share and generating high revenues, disregarded 19 patient well-being, such as sending congratulatory emails to sales representatives that 20 21 22 23 24 25 26 state, "Cha Ching again!" when a patient is prescribed SUBSYS for $40,000. INSYS has increased profits enough to publicly trade SUBSYS, earning $36 million in gross proceeds from the sale of 4.6 million shares in May 2013. Many of the INSYS executives have stock options for hundreds of thousands of dollars. 5. INSYS also maintains a work environment in which the male-dominated 27 28 executive and management team frequently sexually treat female doctors who fail to SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 2 CASENo . . CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW) Document 33 Filed 06/13/16 Page ') 13 of 139 Page ID #:383 1 prescribe "enough" SUBSYS in exchange for their kickbacks from INSYS with 2 blatant disrespect, best summarized in a text message from INSYS Vice President of 3 4 5 6 7 s 9 Sales Alec Burlakoff, in a text message to the Relator regarding a female doctor in her territory: "She fuckn sucks kock mia! What else can I say! XOXOXO .. .I hate that stupid bitch - dr banchik! !!!!!! ! I want to jerk off in her fuckn face! Joe would jerk off in her face, but his dick is too tiny for him to grab." The same attitudes and behavior were used harass female sales representatives. 10 11 12 6. In connection with the filing of this original Complaint, Relator has furnished the United States with substantially all material evidence and information 13 14 in Relator's possession. Jurisdiction and Venue 15 16 7. This Court has subject matter jurisdiction over this action under 31 17 18 19 U.S.C. §§ 3730 and 3732. 8. This Court has personal jurisdiction over the Defendants pursuant to 31 20 21 22 23 U.S.C. § 3732 (a) because the Defendant transacts business in this judicial district. 9. Venue is proper in this District pursuant to 31 U.S.C. § 3732 (a) and under 28 U.S. C. § 1391 (c) because the Defendant transacts business in this judicial 24 25 district. 26 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 3 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW) Document 33 Filed 06/13/16 Page ) 14 of 139 Page ID #:384 Parties 1 2 10. Relator Maria Guzman is a citizen of the United States and a resident of 3 4 5 6 Clayton, North Carolina. 11. Relator resided in Florida until June 2013. 12. Guzman began working for INSYS in January 2012 as a Specialty Sales 7 8 9 Professional and was fired in July of 2013. 13. At all times material hereto, John N. Kapoor was the Founder and 10 11 Executive Chairman of INSYS, and held the majority of its shares. He exercised his 12 authority to direct and control many of the activities described herein. Kapoor was 13 14 adamant that doctors selected for the speakers program be actively prescribing 15 Subsys. In addition, Kapoor was aware of and supported the sales initiative to push 16 doctors to prescribe 400 mcg only instead of 100 or 200 mcg doses. 17 18 14. At all times material hereto, Michael Babich was the Chief Executive 19 Officer of INSYS, and exercised his authority to direct and control many of the 20 21 22 23 activities described herein. 15. Michael Babich has served as President since November 2010 and was appointed Chief Executive Officer in March 2011. From March, 2007 until his 24 25 appointment as President of INSYS Therapeutics. Babich was Chief Operating 26 Officer and a Director of INSYS Pharma, Inc., a wholly owned subsidiary. He had 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINTUNDER SEAL 4 CASENo . . CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 15 of 139 Page ID #:385 1 previously worked at EJ Financial Enterprises, Inc., a venture capital firm founded by 2 Defendant Kapoor. 3 4 5 6 7 8 9 16. Alec Burlakoff was originally hired by INSYS as a regional sales manager but in September of 2012, was quickly promoted to national Vice-President of Sales, where he exercised his authority to direct and control many of the activities described herein 17. Before coming to sell INSYS' opioid, Burlakoffhad been previously 10 11 employed selling opioids for Cephalon, which plead guilty to criminal charges for the 12 illegal marketing of the opioid Actiq. To illegally market Actiq, Cephalon had its 13 14 sales representatives (a) call on physicians who would not normally prescrive the 15 drugs in the course of their practice; (b) prompt the doctors to initiate conversations 16 about off-label uses; (c) tell doctors how to document their off-label uses to get the 17 18 drugs paid for by Medicare, Medicaid, and private insurers; and (d) send the doctors 19 to lavish "consultant" meetings. Cephalon also underpaid its sales representatives, 20 21 22 23 and then offered them sizeable sales-based bonuses to encourage off-label sales. 18. Burlakoffhelped manage Cephalon's sales ofFentora, a fentanyl-based drug that Cephalon sold after the Actiq scandal broke, and adopted Cephalon's 24 25 criminal marketing strategies when he moved to INSYS. 26 19. Defendant INSYS Therapeutics, Inc. is a specialty pharmaceutical 27 28 company headquartered at 444 South Ellis Street, Chandler, Arizona, 85224. SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 5 CASENo .. CV 13-5861 GHK (AJWX) ' Case 2:13-cv-05861-JLS-AJW) Document 33 Filed 06/13/16 Page ) 16 of 139 Page ID #:386 . 1 2 20. INSYS is incorporated in Delaware at 1209 Orange Street, City of Wilmington, County of New Castle, Delaware, 19801. 3 4 5 21. Relator is informed and believes and based thereon alleges that each of the entities identified as Does 1-15, inclusive, were the employers, agents, 6 contractors, directors, or otherwise responsible for the acts alleged herein. Their 7 8 9 identity is unknown at this time and will be set forth later when it is known. 22. INSYS has two marketed products: SUBSYS and Dronabinol SG 10 11 12 Capsule, and is awaiting approval for Dronabinol Oral Solution. 23. SUBSYS is a fentanyl sublingual spray: a proprietary, single-use 13 14 product that delivers fentanyl, and opioid analgesic, in seconds for transmucosal 15 absorption under the tongue. 16 24. Transmucosal immediate-release fentanyl ("TIRF") products generated 17 18 $440 million in U.S. sales in 2010 and INSYS believes this market has the potential 19 to expand with its faster-acting fentanyl product, SUBSYS. 20 21 22 23 25. In March 2011, INSYS submitted a New Drug Application to the Food and Drug Administration ("FDA") for Fentanyl SL Spray for the treatment of breakthrough cancer pain in opioid-tolerant patients. 24 25 26 26. The FDA approved SUB SYS for the limited use of relieving breakthrough cancer pain, which is characterized by sudden, often unpredictable, 27 28 episodes of intense pain that can peak in severity despite pain medication. SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 6 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page ) 17 of 139 Page ID #:387 27. 1 2 SUBSYS was approved for sale on January 5, 2012 and was made publicly available on March 26, 2012. 3 28. 4 5 6 On May 7, 2013, 5 days after its initial public offering of common stock, INSYS closed the offering as all 4,600,000 shares had been sold, with aggregate gross proceeds of $36.8 million. 7 29. 8 9 INSYS's Executive Team is comprised of three men and the INSYS Board of Directors has seven male members; there are no females on the Executive 10 11 Team or the Board and very few female managers. 12 30. The absence of women in leadership roles at INSYS contributes to the 13 14 rampant sexual harassment and the hostile work environment for its female 15 employees, including sales representatives experiencing unwanted flirtatious 16 comments from executives and management sending sexually explicit text messages 17 18 to female members of their sales team. 19 31. The INSYS Code Conduct states that, "INSYS values a work 20 21 22 environment that is free of any form of harassment. .. [which] can included unwelcomed sexual conduct, threats or offensive comments." 23 FACTUAL ALLEGATIONS 24 Work History and INSYS's Hiring Strategies. 25 26 32. In January 2012, Guzman began working for INSYS as a Specialty Sales 27 28 Professional. SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAJNTUNDER SEAL 7 CASENo .. CV 13-5861 GHK (AJWX) ------------ ------·- Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page ) 18 of 139 Page ID #:388 1 2 33. Guzman remains on the INSYS South East Region sales team, with her territory in the West Palm Beach area of Florida. 3 4 34. Before serving as a sales representative for SUBSYS, Guzman did not 5 possess any pharmaceutical sales experience: Guzman earned her Bachelor's degree 6 7 in Education and Dance, worked for G&K Services (a company that provides work 8 uniforms), and was a Marketing Associate for Corporate Counseling Associates. 9 35. INSYS hiring individuals without pharmaceutical experience as sales 10 11 12 representatives serves as a standard practice for the company. 36. INSYS Specialty Sales Professionals who lack previous pharmaceutical 13 14 15 16 experience are unfamiliar with compliant marketing standards. 37. In or around late 2012, INSYS hired , a dental hygienist who lacked pharmaceutical sales experience, as a South East Region sales 17 18 representative. 19 38. INSYS apparently hired to have sexual relations with doctors in 20 21 22 23 exchange for SUBSYS prescriptions, which has been implied by INSYS management and employees, through statements such as one in which Joe Rowan, the Southeast Regional Sales Manager told Dr. Bart Gatz that she was as dumb as rocks, 24 25 but that she was sleeping with another doctor and getting a lot of prescriptions out of 26 him." During the April 2013 National Sales Conference Rowan publicly stated that 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 8 CASENo .. CV 13-5861 GHK (AJWX) ') 19 of 139 Page ID #:389 Case 2:13-cv-05861-JLS-AJW \.l Document 33 Filed 06/13/16 Page had been "out there working it" in regards to forming relationships with her 1 2 doctors. 3 4 5 6 39. Aside from recruiting individuals who lack pharmaceutical sales experience, INSYS has also hired many former Cephalon, Inc. employees. One such employee was Karen Hill, who became Insys' national trainer for sales and actively 7 8 promoted Insys' aggressive off label marketing strategy. 9 40. On or around September 29, 2008, the Department of Justice ("DOJ") 10 11 announced a $435 million settlement to resolve off-label marketing claims relating to 12 Actiq, a TIRF product, and two other drugs. 13 14 41. On or around September 29, 2008, the DOJ stated that $375 million of 15 the plea agreement was to resolve False Claims Act allegations arising from claims to 16 Medicaid, Medicare, and other federal programs. 17 18 42. Like the SUBSYS label, the Actiq label stated that the drug was for 19 opioid tolerant cancer patients with breakthrough cancer pain, to be prescribed by 20 21 22 23 oncologists or pain specialists familiar with opioids. 43. Cephalon utilized the mantra "pain is pain," and instructed Actiq sales representatives to focus on physicians other than oncologists and to promote Actiq 24 25 26 for uses other than breakthrough cancer pain. 44. INSYS employees also promote this motto and target doctors other than 27 28 oncologists. SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 9 CASENo .. CV 13-5861 GHK (AJWX) ) 20 of 139 Page ID #:390 Case 2:13-cv-05861-JLS-AJW) Document 33 Filed 06/13/16 Page 1 2 45. In December 2011, INSYS hired Matt Napoletano ("Napoletano"), a former Cephalon executive who led the launch for several of its pain products, as its 3 4 5 Vice President of Marketing. 46. In or around November or December 2012, INSYS hired former 6 Cephalon employee Dan Tondre ("Tondre") as a Specialty Sales Professional. 7 8 9 4 7. During a conference call in late 2012 or early 2013 with other Special Sales Professionals and managers, Tondre described how he sold INSYS drugs to 10 11 doctors, stating that, "Pain is pain. It does not matter whether it is back pain or a 12 migraine. Pain is pain and SUBSYS treats pain." 13 14 48. INSYS management frequently has praised Tondre for his success at 15 Cephalon and has instructed other sales representatives to follow his lead in the 16 marketing of SUBSYS. 17 18 49. In December 2012, Rowan sent a text message to the South East Region 19 sales team congratulating Tondre for making a 1200 mcg SUBSYS sale and then 20 21 22 23 stating that Tondre was "asking for the business wow .. .it works .. .let's get them Southeast." 50. INSYS has hired other former Cephalon employees, many of whom 24 25 26 handled marketing for that company, including Vice President of Sales Alec Burlakoff, Specialty Sales Professional and National Trainer Karen Hill, Specialty 27 28 Sales Professional and Regional Sales Manager for the South East Region Joseph SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 10 CASENo . . CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW) Document 33 Filed 06/13/16 Page ) 21 of 139 Page ID #:391 1 Rowan, Specialty Sales Professional and Regional Trainer Nannette Alonzo, Specials 2 Sales Professional Marcus Seiferith, and Medical Marketing Communications Senior 3 4 5 Manager Desiree Hollandsworth. 51. INSYS has comprised a team of employees who have either been 6 recruited from a pharmaceutical company that settled a multi-million dollar off-label 7 8 marketing lawsuit or individuals without any pharmaceutical sales experience or 9 familiarity with compliant marketing standards. 10 11 52. Babich has actually praised the hiring strategy, stating "The majority of 12 our sales reps have no prior pharmaceutical experience. We think that is very 13 14 15 16 important from the perspective of "they are out there delivering a message." 53. Burlakoff effected and supported Babich's marketing strategy. INSYS, for example, hired Sunrise Lee, a former dancer at a Florida strip club as a sales 17 18 executive. Sunrise also managed an escort service and had no academic degree. 19 Burlakoff defended the decision, claiming "Doctors really enjoyed spending time 20 21 22 23 with her and found Sunrise to be a great listener." "She's more of a closer", he added praising her "empathy". 54. Babich also established a compensation system certain to induce 24 25 misbehavior. Under Babich, INSYS established sales force incentives which 26 completely reverse the pharmaceutical industry compensation manual. Although 27 28 typical pharmaceutical reps earn salaries in the $80-90,000 range with a potential for SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT 11 UNDER SEAL CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page ) 22 of 139 Page ID #:392 1 $30-40,000 in bonuses, Subsys reps earn only $40,000 in salary with a potential 2 $72,000 in bonuses. Babich boasted that Subsys' 38% sales growth between the 3 4 5 third quarter and the fourth quarter of 2013 was "strong testimony to the success of this approach." 6 55. Babich's carrot was paired nicely with Burlakoff's stick. Burlakoff 7 8 9 frequently threatened to fire any sales representative who didn't get at least one new prescription written every day. 10 11 12 56. INSYS also established relationships with and speaker programs for former Cephalon prescribers, including Doctor Stuart Krost ("Dr. Krost"), Doctor 13 14 Bart Gatz ("Dr. Gatz"), and Doctor Lisa Banchik ("Dr. Banchik"). The INSYS Business Model and Kickbacks to Doctors. 15 16 57. After Burlakoff arrived, the speaker program became an overt kickback 17 18 program sometimes with just the doctor and one attendee. Relator is informed and 19 believes and based thereon alleges that Burlakoff told the sales staff that the purpose 20 21 22 23 of the speaker's program was to "put money into the pockets" of doctors 58. Under Burlakoff, the INSYS business model consists of providing doctors with substantial compensation - including, stock options, strip club trips, and 24 25 26 hiring physicians' significant others - so that the doctor then returns the "favor" to the sales representative by prescribing SUBSYS. One physician was even offered 27 28 $100,000 in payments. SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 12 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page ) 23 of 139 Page ID #:393 1 2 59. In or around March 2013, National Trainer Karen Hill created a Power Point presentation ("2013 PowerPoint") for Specialty Sales Professionals 3 4 which illustrates the centrality of payoffs, such as instructing representatives to target 5 Drs. Lee and Arcila for more lucrative speaking opportunities and stating that Drs. 6 7 Komick, Kramarich, and Khanna will be paid through more preceptorships (which 8 usually entail allowing a representative to shadow the doctor but which INSYS is 9 using as another marketing tool). 10 11 60. The 2013 PowerPoint contains several pictures of doctors out drinking 12 with INSYS staff. 13 14 61. The 2013 PowerPoint outlines what "hot buttons" representatives should 15 utilize with doctors, such as 16 62. "$" and "hanging out." The 2013 PowerPoint provides "special notes" about the doctors and 17 18 ways to increase sales with them such as "loves to party." 19 63. The 2013 Power Point highlights "challenges" that representatives will 20 21 22 23 face with some of the doctors such as "very conservative and cautious ... continue challenging her thinking" as well as "potential" with some physicians, such as "good with increasing strengths." 24 25 26 64. In July 2012, Vice President for Sales Alec Burlakoff sent a text message to Guzman stating, "I know pedro [Dr. Charles Huang's physician's 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAJNT UNDER SEAL 13 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page ) 24 of 139 Page ID #:394 1 assistant] very well also ... He's the one who probably writes the most. Let's take 2 pedro out for some fun! I bet you he would LOVE to smoke with us!" 3 65. 4 5 6 INSYS's tactics have resulted in doctors recommending and writing SUBSYS prescriptions for their patients, including those on Medicare and Medicaid, in exchange for kickbacks, and often times switching patients from Actiq, SUBSYS' s 7 8 competitor. 9 Kickbacks and Speaker Programs. 10 66. 11 12 One of the primary ways INSYS provides doctors with kickbacks for prescribing SUBSYS is through its speaker programs. 13 67. 14 INSYS speaker programs consist of the doctors giving presentations to 15 others regarding their experience with SUBSYS and in return they receive a speaker 16 fee. 17 18 68. INSYS officially states that speaker programs are based on clinical 19 experience, and not on the amount ofSUBSYS the doctor prescribes. However, John 20 21 22 23 Kapoor, INSYS' founder and executive chairman, instructed Burlakoffthat Subsys speakers should support and show belief in the product or they would have to be removed from the speaker program. This support and belief was evidenced by high 24 25 prescriptions. 26 69. In July 2012, Burlakoff sent a text message to several sales 27 28 representatives in which he stated "we have done all these programs and we are flat SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 14 CASENo . . CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page ) 25 of 139 Page ID #:395 1 in sales ... Are our speakers doing their part ... We must hold our speakers accountable, 2 programs are going to begin to get cancelled very quickly ... Clearly, we have done a 3 4 5 6 7 8 9 poor [job] setting proper expectations for our speaker." 70. In July 2012, Burlakoff sent Guzman a text message stating, "Don't worry about Dr Banchik or Dr Vendrys's speaking abilities. They do not need to be good speakers, they need to write a lot of Subsys." 71. In December 2012, Burlakoff sent the following text message: "Mia - 10 11 just wanted to make sure you know that Dr Banchik is taking you for a ride. She 12 doesn't produce shit for units or dollars. She needs to understand you can't keep 13 14 15 16 giving her programs, when gatz has truly earned them! Show her the numbers!" 72. During the April 2013 conference, Rowan explained how he would like the speaker program ran, instructing representatives not to take doctors to Ruth's 17 18 Chris Steakhouse or other expensive restaurants because he did not want a large 19 amount of money spent on "dipshits that aren't going to write," but would rather keep 20 21 22 23 that money in the budget to spend on other doctors for "better uses." 73. The INSYS Code of Conduct states that the company must "monitor all fees, payments, and compensation paid for advisory, consulting or other services to 24 25 26 avoid even the appearance of inappropriate influence." 74. The INSYS Certificate of Compliance states, "INSYS has established an 27 28 annual spending limit of $1,500 on meals and educational items which may be SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 15 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page ) 26 of 139 Page ID #:396 1 provided to a healthcare professional." Fees from services to such healthcare 2 professionals are excluded from this amount but are always based on fair market 3 4 value ... items of nominal value (less than $10) or financial support for educational 5 programs are also exempt from this amount." 6 75. In April 2013, Burlakoff sent Dr. Krost a text message in April 2013 7 8 which stated, "Dr. Krost. .. I know it[']s not a lot to you, but I can commit to 9 lOOKto you via speaker programs or meals toward your restaurant. We don't need the food, 10 11 just charge our card and give [a]s an itemized receipt. Just need your support on 12 subsys." 13 14 76. In October 2012, Burlakoff sent Guzman a text message and an email 15 stating that Dr. Krost would earn $1,600 per program and that INSYS would hold all 16 of Dr. Krost's programs in the restaurant he owns, to persuade him to switch his 17 18 Aqtiq patients to SUBSYS. 19 77. In October 2012, Burlakoff indicated to Guzman in a text message that 20 21 22 23 INSYS would pay Dr. Gatz $750 per hour for trainings conducted via telephone. 78. In December 2012, Burlakoff sent Guzman a text message stating that INSYS paid Dr. Gatz $36,000 in one quarter for speaker programs. 24 25 26 79. The doctors affiliated with INSYS participate in the speaker programs because of the substantial payments and kickbacks they receive, rather than their 27 28 belief in the benefit of the drug for cancer patients. SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 16 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW ) Document 33 Filed 06/13/16 Page 27 of 139 Page ID #:397 1 2 80. In September 2012, Burlakoff sent Guzman a text message indicating that "I think dr krost would want to speak, he loves money." 3 4 81. On August 16, 2012, Dr. Banchik sent a text message to Guzman 5 thanking her for a "fun night" and stating "I just wish I had more 6 7 8 9 MD'S that can write it themselves but these people will refer to me to write it for them." 82. In 2012, Dr. Banchik received speaker fees and referrals from participating in the INSYS speaker programs, and because she then obtained more 10 11 patients through these referrals, she was able to prescribe more SUBSYS and in 12 return earn more speaker programs and fees from INSYS. 13 14 83. In September 2012, Dr. Banchik indicated how important these speaker 15 fees to her when she sent a text message to Burlakoff asking why 16 INSYS had failed to pay her for her program, stating, "I am not happy Alec." 17 18 84. In September 2012, Dr. Gatz sent Guzman an email inquiring about 19 when he would be paid the $7,200 he was offered for three speaker programs in 20 21 which he participated, as his honoraria check had been lost. 22 Strip Clubs, Shooting Ranges, Meals, and Referrals. 23 24 25 85. In addition to the program speaker fees that doctors receive for prescribing SUBSYS, INSYS also provides doctors with other kickbacks. 26 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAlNT UNDER SEAL 17 CASENo . . CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW ) Document 33 Filed 06/13/16 Page 28 of 139 Page ID #:398 1 2 86. On or around Friday, January 18, 2013, Burlakoff and Rowan treated Dr. Gatz to a strip club visit, where they purchased him two $500 private champagne 3 4 5 6 7 8 9 room sessions, to ensure he continued prescribing SUBSYS. 87. On or around January 19, 2013, Burlakoff sent Guzman a text message expressing that it "[w Jent fantastic last night. Bart and I got back around 4 am." 88. Shortly after January 18, 2013, Rowan sent Dr. Gatz a text message stating, "Dr. Gatz, we appreciate you more than you could believe .... Leaving that 10 11 meeting Alec and I felt very confident and what was going to happen .... And you 12 show loyalty to us like no other ... You need anything at all, it is done." 13 14 89. Dr. Gatz responded to Rowan's text message in January 2013 with, 15 "Thank you for the best weekend in years! !!" 16 90. The strip club visit resulted in an increase in prescription volume, as 17 18 Guzman reported to Burlakoff and Rowan on Wednesday, January 23, 2013, just five 19 days later, that Dr. Gatz had already written 17 SUBSYS prescriptions in three days. 20 21 22 23 24 25 26 91. Under the its Code of Conduct, the $1,000 INSYS spent for private champagne room sessions would not qualify as payment for an advisory services from Dr. Gatz nor would it qualify as gift of less than $100 designed for the patient or for educational purposes; it would fall under the category of prohibited recreational activity. 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 18 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 29 of 139 Page ID #:399 92. 1 INSYS has also provided Dr. Gatz with many expensive dinners, stock 2 options, lunches for his office, and a trip to a shooting range, which serves as part of 3 4 a company-wide scheme to both encourage doctors to, and reward them for, 5 prescribing SUBSYS. 6 93. From on or about July 2 to July 10, 2012, Dr. Gatz prescribed 120 units 7 8 ofSUBSYS. 9 94. On July 18, 2012, Burlakoffinstructed Guzman in a text message that 10 11 she could take Dr. Gatz and "whoever out," and that he would supply his credit card 12 number for the dinner. 13 95. 14 From on or about July 23 to July 30, 2012, Dr. Gatz prescribed a total of 15 300 SUBSYS units. 16 96. On or about October 10, 2012, INSYS provided Dr. Gatz's office with 97. From on or about October 16 to October 30, Dr. Gatz wrote 17 18 lunch. 19 20 21 22 23 prescriptions for 720 units of SUBSYS. 98. In or around November 2012, Rowan suggested that INSYS send top prescribing doctors Thanksgiving dinners. Thanksgiving dinners were provided to 24 25 Dr. Gatz' entire office staff. Insys correspondingly increased spending limits on sales 26 representatives' charge cards to cover this additional expense. 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT 19 UNDER SEAL CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW) Document 33 Filed 06/13/16 Page 30 of 139 Page ID #:400 ) 1 2 99. During the April 2013 Arizona conference, Rowan and is South East Region sales team acknowledged how successful these meals were and, in particular, 3 4 5 6 7 how Dr. Gatz's Office Manager ensured that prior authorizations were completed after the meals were delivered. 100. A January 2013 report sent to INSYS sales representatives indicates 8 that the company spent over $58,000 on meal expenses for doctors, with Rowan and 9 Burlakoff spending a total of approximately $15,000. 10 11 12 101. The IN SYS Code of Conduct states that "[ m]eals may occasionally be provided to HPCs [health care professionals] so long as they are modest and shared at 13 14 15 16 a reasonable location that is conducive to discussing educational information." 102. The INSYS Certificate of Compliance specifies that "INSYS has established an annual spending limit of $1,500 on meals" per provider. 17 18 103. The Compliance Guidance for Pharmaceutical Manufacturers states that 19 "entertainment, recreation, travel, meals and other benefits ... potentially implicate the 20 21 22 23 24 anti-kickback statute if any one purpose of the arrangement is to generate business for the pharmaceutical company." 104. The INSYS Code of Conduct states that the company must "monitor all 25 fees, payments, and compensation paid for advisory, consulting or other services to 26 avoid even the appearance of inappropriate influence." 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 20 CASENo . . CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW) Document 33 Filed 06/13/16 Page 31 of 139 Page ID #:401 ) 105. In the January 2013 email containing the expense report, Burlakoff 1 2 stated that the representatives with the highest meal expenses should be ranked 3 4 number one in their region and obtaining a "return on investment." 5 6 106. From on or about January 24 to February 5, 2013, Dr. Gatz prescribed a total of 670 SUB SYS units. 7 107. On or about February 5, 2013, Rowan sent text messages to Dr. Gatz 8 9 and Guzman asking, "Would you like to get a bite to eat? Somewhere spectacular! 10 11 Maybe shoot guns before?" 12 108. On or about February 19, 2013, Rowan took Dr. Gatz to the shooting 13 14 15 16 range. 109. From on or about February 19 to March 7, 2013, Dr. Gatz prescribed a total of 1010 units of SUBSYS. 17 18 19 110. On or about March 11, 2013, Rowan sent Dr. Gatz a text message stating that he would take Dr. Gatz out to dinner anywhere he wanted, so that they 20 21 22 23 could "eat and celebrate life." 111. INSYS also celebrated Dr. Gatz's loyalty in recommending SUBSYS by providing him with stock option. 24 25 112. In early 2013, Dr. Gatz had a conversation with Guzman regarding the 26 stock options INSYS had offered her and she ascertained from his excited tone and 27 28 knowledge of managing this particular stock that he was also receiving such options. SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 21 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW)J Document 33 Filed 06/13/16 Page 32 of 139 Page ID #:402 1 2 113. On February 19, 2013, Guzman's belief that Dr. Gatz was receiving stock was confirmed by a conversation that she heard between Rowan and Dr. Gatz 3 4 5 while the three were out at the shooting range and dinner, a conversation in which Rowan told Dr. Gatz that "INSYS takes care of its people" and that "I [Rowan] have 6 7 8 9 stock options, [Guzman] has stock options, and you will have stock options." 114. During the conversation regarding the stock options, Dr. Gatz also indicated that he would like a position with INSYS and a home in Arizona, and 10 11 Rowan reiterated that "INSYS takes care of its people." 12 Hiring a Doctor's Significant Other Family Member, or Friend. 13 14 115. In addition to the monetary and meal kickbacks, INSYS also encourages 15 16 17 18 doctors to subscribe SUBSYS by hiring their significant others or family members. 116. On or around August 18, 2012 Burlakoff sent a text message to Dr. Charles Huang ("Dr. Huang") stating "I need to know if Paula [Dr. Huang's 19 20 girlfriend] would take a full time job working for me? I also could use a few Subsys 21 prescriptions. We have not seen anything, I want to have some fun!!! Can't do it w/o 22 23 subsys scripts coming in at least once a day. Have Paula call me next week. Let's 24 make it like the old days, tum the subsys switch on please Dr Huang!! ...We mean 25 what we say,just need you too (sic) get it going strong." 26 27 28 117. From on or about August 21, 2012 to August 22, 2012, Dr. Huang prescribed 60 units of SUBSYS. SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 22 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW) Document 33 Filed 06/13/16 Page 33 of 139 Page ID #:403 1 118. INSYS hired Dr. Huang's girlfriend, Paula, in or around fall 2012. 2 119. On or about March 28, 2013, Rowan asked Guzman if she could 3 4 5 recommend any sales representatives for the Nashville, Tennessee region, and stated that the only qualification that INSYS required was that the individual was eighteen 6 years old and that he did not care if the person did not possess a college degree. 7 8 9 120. During the conversation regarding a Nashville sales representative on or around March 28, 2013, Rowan told Guzman that the individual could be "anyone as 10 11 long as it was a doctor's girlfriend, son or daughter," and further that if the individual 12 were "banging a doctor, that would be perfect." 13 14 121. Relator is informed and believes and based thereon alleges that that 15 Burlakoff had personal knowledge of INSYS hiring other sales representatives at the 16 request of Subsys prescribers. 17 18 122. Babich engaged in the same misconduct. Relator is informed and 19 believes and based thereon alleges that Dr. Ruan in Mobile, Alabama promised 20 21 22 23 promised Babich that if Babich hired Joe Rowan as a sales representative, Dr. Ruan would become the top prescriber of Subsys. Rowan was hired and assigned to Dr. Ruan, who did indeed become a top prescriber of Subsys for certain periods. Dr. 24 25 Ruan's partner, Dr. Couch, was also a top Subsys prescriber and the two doctors had 26 ownership interest in a pharmacy that dispensed Subsys. 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 23 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 34 of 139 Page ID #:404 1 Burlakoff Offered Physicians Lucrative Business Deals and Partnerships 2 123. Relator is informed and believes and based thereon alleges that 3 4 Burlakoff personally offered Gawin Awerbuch, M.D., financial incentives, including 5 commissions based on the number of prescriptions and the strength of the dosage. 6 7 8 9 These illegal incentives triggered a prescription-writing spree which did not abate until May of 2014 when Awerbuch was arrested for Medicare fraud and illegal distribution of controlled substances. By then Awerbuch had written 1,283 10 11 prescriptions for Subsys for Medicare beneficiaries alone, costing Medicare nearly 12 seven million dollars. 13 14 124. Relator 1s informed and believes and based thereon alleges that 15 Burlakoff gave the manager of a multisite pain management clinic an annual 16 compensation package of $73,000 for the manager's "contacts" while letting the 17 18 manager keep the 19 20 21 INSYSjob secret from the pain management clinic. Instructions for Avoiding Anti-Kickback Standards. 125. Some INSYS managers and sales representatives were aware of the 22 illegality of using kickback schemes to obtain SUBSYS sales, particularly the former 23 Cephalon employees. 24 25 126. During the April 2013 INSYS conference in Arizona, management and 26 specialty sales professionals shared methods with one another on how to avoid anti- 27 28 kickback standards. SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 24 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW ) Document 33 Filed 06/13/16 Page 35 of 139 Page ID #:405 127. During the April 2013 conference, former Cephalon employee and 1 2 INSYS National Trainer Hill stated that she would have a "legit [speaker] program" 3 4 5 6 7 8 at an inexpensive restaurant where INSYS would provide her with $100 to spend per person, and she would use that budget to purchase wine and instruct the restaurant staff to box the wine for the doctors to take home, remaining cautious as to how the doctors left with the wine. 9 128. During a meeting at the April 2013 Arizona conference, Former 10 11 Cephalon employee and Manager Rowan stated that he is able to order beer, wine, 12 cigars, and expensive meats through his friend who owns a delicatessen, and that him 13 14 and another employee have been "doing this for years," which is one of the reasons 15 he hired that employee. 16 129. After informing his sales team about his delicatessen owner friend at the 17 18 2013 conference meeting, Rowan then asked his representatives, "do you think he 19 runs it through as a cigar or a filet mignon? No. He runs it across as, you figure the 20 21 rest out." 130. During the April 2013 meeting, Rowan indicated that the representatives 22 23 would receive more of a benefit from providing the doctor and his or her family with 24 25 some filet mignons and bottles of wine than by providing a lunch to the office. 26 131. During the 2013 conference meeting, Rowan stated that he used his 27 28 friend to order expensive products and then used them to encourage physicians to SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 25 CASENo .. CV 13-5861 GHK (AJWX) ---~ ----------- -----·------- Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 36 of 139 Page ID #:406 ) 1 prescribe SUBSYS, providing the example of how he inconspicuously placed a 2 cooler filled with filet mignons by Dr. Couch's desk and then told the doctor "thank 3 4 5 me later." 132. After Rowan described his methods for avoiding kickback standards 6 during the 2013 conference meeting, Hill instructed that the representatives should 7 8 9 get everything through a caterer, and that she had heard of other representatives getting televisions for their doctors through a caterer. 10 11 133. After Hill's comments regarding obtaining items for doctors through 12 caterers during the April conference meeting, Rowan then told the South East Region 13 14 team, "I don't want to know what you do," but stated that they should do what they 15 need to, but "it's not on me." 16 134. During the April conference meeting, Rowan instructed his sales 17 18 representatives to "think outside of the box," and provided the example of going into 19 a restaurant during lunch, asking the staff to ring up a to-go receipt for ten people, but 20 21 22 23 then asking them to not provide the lunch but rather give the representative credit for when they returned with the doctor and his or her spouse later that night for dinner. 135. After providing the example of how to treat doctors to dinner by 24 25 appearing to be within kickback standard limits during the April 2013 conference, 26 Rowan then told the representatives, "This is the shit we've done all of our careers. 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 26 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW ) Document 33 Filed 06/13/16 Page 37 of 139 Page ID #:407 1 But be smart about it, don't be a dipshit. I'm not forcing you to do this, but just 2 telling you this is what we do." 3 136. After explaining how he encouraged doctors to write SUBSYS 4 5 6 7 8 9 prescriptions by offering them filet mignons and dinners during the 2013 conference meeting, Rowan explained "I don't think I did anything wrong because I did it with food;" however, when one sales representative in the meeting began writing notes regarding his methods, Rowan stated, "there is nothing to write down, just thinking 10 11 outside of the box." 12 SUBSYS's Indication and Usage, and INSYS's Off-Label Marketing. 13 14 137. INSYS developed methods for persuading doctors to prescribe SUBSYS 15 16 for contraindicated and off-label uses, which the FDA states can be deadly. 138. According to its label, the FDA indicated SUBSYS for the limited use of 17 18 management of breakthrough pain in adult cancer patients who are already receiving 19 20 and who are tolerant to around-the-clock opioid therapy for their underlying 21 persistent cancer pain. 22 139. Patients considered opioid tolerant are those who are taking around-the- 23 24 clock medicine consisting of at least 25 mcg of transdermal fentanyl/hour. 25 140. The FDA contraindicated SUBSYS for use in opioid non-tolerant 26 27 patients because life-threatening respiratory depression and death could occur in 28 patients not on a chronic regiment of opioids. For this reason, SUBSYS is SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 27 CASENo .. CV 13-5861 GHK (AJWX) ~~~-----------~ ,~~ Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page ) 38 of 139 Page ID #:408 1 contraindicated in the management of acute or postoperative pain, including 2 headaches or migraines. 3 4 5 6 7 8 9 141. According to the label, the FDA intended that SUBSYS be used only in the care of cancer patients and only by oncologists and pain specialists who are knowledgeable of and skilled in the use of Schedule II opioids to treat cancer pain. 142. According to the label, the initial dose of SUB SYS to treat episodes of breakthrough cancer pain is always 100 mcg. 10 11 143. According to the SUBSYS label, due to the potential for fatal overdose, 12 physicians should not convert patients on a mcg per mcg basis from any other 13 14 15 16 fentanyl product. 144. According to the SUBSYS label, death has been reported in children who have accidently ingested transmucosal immediate-release fentanyl products and 17 18 19 therefore SUB SYS must be kept out of the reach of children. 145. Due to the risk of misuse, abuse, addiction, and overdose, SUBSYS is 20 21 22 23 only available through a restricted program created by the FDA: the TIRF Risk Evaluation and Mitigation Strategy (REMS) program. 146. INSYS has systematically violated and continues to violate every one of 24 25 26 these FDA indications and warnings 147. INSYS has created the "effective dosage message," which continually 27 28 encourages sales representatives to push doctors to prescribe doses higher than 100 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 28 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 39 of 139 Page ID #:409 ) 1 mcg and to quickly titrate patients to high levels because low SUBSYS dosages, as 2 Babich states, are known as "the kiss of death." 3 4 148. Relator is informed and believes and based thereon alleges that 5 Burlakoff personally trained representatives to use the off-label message that if 6 7 8 9 patients had previously taken another Fentanyl product, the doctors should start patients on dosage levels higher than those indicated by the FDA because the FDAapproved starting dose might be insufficient. Burlakoff insisted that "everyone 10 11 12 knows it doesn't work at that level." 149. Relator is informed and believes and based thereon alleges that the field 13 14 15 16 training Burlakoff conducted via "ride alongs" differed markedly from their formal trainings, as Burlakoff recommended that doctors start patients on doses 400% greater than the FDA-approved starting dose, and that they move patients to doses 17 18 19 800% and 1600% greater as quickly as possible. 150. Relator is informed and believes and based thereon alleges that Babich 20 21 22 23 was fully aware of the financial advantage to INSYS of pushing patients to dangerously high dosage levels. For example, at a May, 2014 conference, he stated that "as patients stay on the drug longer, they have a tendency to move up in dose, 24 25 making prescriptions more valuable as the patient stays on the drug ... " 26 151. Relator is informed and believes and based thereon alleges that Kapoor 27 28 yelled at sales representatives to get doctors to quickly move patients to higher doses, SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAlNT UNDER SEAL 29 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 40 of 139 Page ID #:410 1 and that he also pressured sales managers to start their patients on doses higher than 2 the FDA allowed. 3 4 152. Relator is informed and believes and based thereon alleges that at the 5 same April, 2014 sales meeting where Burlakoff told his sales staff to disregard his 6 7 8 9 previous instructions to push off-label uses and off-label dosage labels for Subsys, he also warned the staff that anyone who discussed problems with doctors or patients in an email would be fired. 10 11 12 153. INSYS has recently begun to rely on Linden Care Pharmacy, a mail order pharmacy in New York, for its SUBSYS supply. 13 14 154. INSYS management promotes sales representatives and doctors to use 15 this pharmacy, as illustrated in a text message that Burlakoff sent to Guzman on or 16 around February 20, 2013, instructing her to, "Just use Linden care, they don't bitch." 17 18 155. In March 2013, Guzman became concerned about using this pharmacy 19 because a pharmacist in her territory, Doctor Brad Williams ("Dr. Williams") from 20 21 22 23 24 25 26 Family Care Pharmacy, told her in both a telephone conversation and email letter that it was dangerous for SUBSYS to be distributed to patients through the mail as this illustrated that a pharmacist had not properly educated the patient on storage and disposal of the drug, which could result in children or pets accidently ingesting and overdosing on this powerful drug. 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 30 CASENo . . CV 13-5861 GHK (AJWx) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page ') 41 of 139 Page ID #:411 1 156. During the March 2013 telephone call with Guzman, Dr. Williams told 2 her that some of his patients had come into the pharmacy complaining that they had 3 4 not even ordered SUBSYS but that it had arrived through the mail at their homes. 5 6 157. During the March 2013 conversation with Guzman, Dr. Williams also expressed his concern that medication crossing state lines from New York, where 7 8 Linden Care is located, to Florida, where his patients lived, violated state laws. 9 158. Guzman alerted Burlakoffto Dr. William's concern with the potential 10 11 risk to patient health and safety by utilizing a mail order pharmacy, but INSYS 12 continues to instruct sales representatives to use Linden Care. 13 159. During the April 2013 conference in Arizona, Liz Gurrieri ("Gurrieri") 14 15 from the Internal Reimbursement Center ("IRC") stated that representatives could 16 pre-populate their opt-in forms with Linden Care for the pharmacy section of the 17 18 form. 19 160. Relator is informed and believes and based thereon alleges that Babich 20 21 22 23 knew that only about 10% were for patients with a cancer diagnosis. The majority of prescriptions were for patients with low back pain, sciatica, or peripheral neuropathy secondary to diabetes. Babich observed this because he personally saw all of the 24 25 patients' diagnoses as they were funneled through the PA team, which was given 26 each patient's diagnosis and a list of drugs the patient had previously taken. It was so 27 28 unusual for the team to actually see a patient with a cancer diagnosis that they would SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 31 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page ) 42 of 139 Page ID #:412 1 get excited. Babich, who remained in close personal contact with the PA team, was 2 aware of this .. 3 4 161. Relator 1s informed and believes and based thereon alleges that 5 Burlakoff trained the Subsys sales force to "agree" with doctors that the drug was 6 7 good for any pain spike, whether or not it was for breakthrough cancer pain. 162. Relator is informed and believes and based thereon alleges that Babich 8 9 also, at a September, 2012 sales meeting, instructed the sales staff to give physicians 10 11 the off-label message that "breakthrough pain is the same as breakthrough cancer 12 pain". 13 163. Relator is informed and believes and based thereon alleges that 14 15 Burlakoff would do "ride alongs", where he accompanied sales representatives on 16 physician calls so he could teach them his illegal techniques, and that those 17 18 representatives with pharmaceutical industry experience were alarmed by what they 19 saw and heard Burlakoff do. 20 164. Relator is informed and believes and based thereon alleges that 21 22 23 Burlakoff personally trained representatives to use the off-label message that "pain is pain". 24 25 26 165. Relator and other employees observed and remarked that Babich and Burlakoff were only interested in driving sales and making money by selling Subsys 27 28 to every kind of patient. SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAlNT UNDER SEAL 32 CASENo . . CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 43 of 139 Page ID #:413 166. Relator is informed and believes and based thereon alleges that only 1 2 after law enforcement began scrutinizing INSYS' sales practices and Dr. Awerbuch's 3 4 5 Subsys script-writing spree did Burlakoff, at an April, 2014 training session, tell the sales representatives that they could no longer be doing what he had trained them to 6 do, thus admitting that they had been trained to market Subsys illegally. 7 8 The IRC and Prior Authorization. 9 167. INSYS created the IRC in order to help doctors and patients obtain 10 11 approval for SUBSYS, including for off-label and contraindicated uses. 12 168. The IRC and physicians enter into agreements, in which the physician 13 14 provides patient information that the IRC then uses to complete prior authorization 15 16 forms. 169. INSYS utilizes Specialty Sales Professionals to gather patient 17 18 information and assist in receiving prior authorization. This includes instructing sale 19 20 representatives to review private patient information within doctors' offices. 21 170. The IRC handles appeals when prior authorization requests are denied. 22 171. The IRC occasionally issues "super vouchers " to patients while their 23 24 prior authorization and appeals are pending, which allows for free SUBSYS until 25 approval is obtained. 26 27 28 _______ SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 33 CASENo . . CV 13-5861 GHK (AJWX) , -~---·--·"" Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 44 of 139 Page ID #:414 1 172. The IRC sometimes uses past and/or later-found instances of patients' 2 cancer diagnoses to obtain the Centers for Medicare and Medicaid Services ("CMS") 3 4 5 approval for the treatment of non-cancer pain. 173. On or around April 19, 2013, Gurrieri stated during an INSYS 6 conference presentation to the South East Region team that the IRC needs to know if 7 8 a patient had cancer in 1992 or if they have cancer - even if that is not what the 9 doctor is treating them for - because that cancer diagnosis is almost an assurance of 10 11 12 approval. 174. Gurrieri stated during the April 2013 presentation that patient face sheets 13 14 15 16 are important for the representatives to collect from the doctors because it is through reading those forms that the IRC "finds cancer a lot of the time." 175. During the conference presentation, Gurrieri stated that INSYS is 17 18 "obviously promoting this on-label," but then went on to instruct the representatives 19 to ask doctors if the patient has a history of cancer and to ensure they include all 20 21 22 documentation for SUBSYS approval. Instructing Sales Representatives to Market for Off-Label Uses. 23 24 25 176. INSYS engages in the off-label marketing of SUBSYS by encouraging doctors to write prescriptions for conditions other than breakthrough cancer pain. 26 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 34 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page ) 45 of 139 Page ID #:415 1 177. INSYS is careful to not include the promotion of off-label marketing in 2 official training material or emails, and recently warned employees during the April 3 4 2013 conference to keep questionable communications out of text messages. 5 178. INSYS nevertheless educates its sales representatives on how to 6 implement off-label marketing strategies during conference calls and in-person 7 8 meetings. 9 179. During the April 2013 conference in Arizona, Regional Sales Manager 10 11 Rowan told the South East Region team, "Don't be afraid of what we are indicated 12 for." 13 14 180. During this conference meeting on or around April 18, 2013, Rowan 15 asked his sales team to state the SUBSYS indication and the team responded it was 16 for breakthrough cancer pain. Rowan replied it was for breakthrough pain in cancer 17 18 patient, and he then stated "let's change that" and then stressed "pain" in his second 19 pronouncement of the indication. 20 21 22 23 181. Specialty Sales Professional Tondre then instructed the other representatives during the conference meeting on or around April 18, 2013 to ask their doctors if there was any difference in their patients having cancer or back pain, 24 25 and that if the patient ranks high on the pain scale, that "that's the whole point, pain 26 is pain." 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 35 CASENo . . CV 13-5861 GHK (AJWX) ----- ------------ Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 46 of 139 Page ID #:416 1 2 182. The "pain is pain" mantra Tondre mentioned during the April conference meeting was the same that he had used in an early 2013 conference call 3 4 where he stated "pain is pain, and SUBSYS treats pain;" this same mantra helped 5 prompt the DOJ to file a False Claims Act suit against Tondre's previous employer, 6 7 8 9 Cephalon, as stated in the DOJ September 29, 2008 press release. 183. Sales Manager Rowan allowed Tondre to share his methods for encouraging doctors to write off-label or contraindicated prescriptions without 10 11 12 interruption during the April 2013 conference meeting. 184. Later in the conference meeting on or around April 18, 2013, Rowan 13 14 instructed the team to call him if there were any issues that should not be put in 15 writing, such as associating speaker programs and fees with how many prescriptions 16 a doctor wrote. 17 18 185. During the conference meeting on or around April 18, 2013, Rowan told 19 his team that SUB SYS was great for sickle cell anemia, which is not a type of cancer. 20 21 22 23 186. In its September 29, 2008 press release regarding the FCA lawsuit against Cephalon, the DOJ stated that promoting fentanyl products for sickle cell anemia constituted off-label marketing. 24 25 26 187. During the conference meeting on or around April 18, 2013, former Cephalon employee Hill instructed other representatives on the methods she utilized 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 36 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW ) Document 33 Filed 06/13/16 Page ) 47 of 139 Page ID #:417 1 on "how to throw something out to a doctor without sounding off-label," such as 2 quoting another doctor. 3 4 5 188. After Hill stated that a representative could quote another doctor in order to offer the off-label promotion of SUB SYS during the April 2013 conference 6 meeting, Rowan interjected and stated that this was not allowed because a 7 8 representative cannot use a third party to achieve off-label marketing. 9 189. After Rowan mentioned that using a third party to achieve off-label 10 11 marketing was not allowed during the April conference meeting, Hill then provided 12 an example of the conversation she would have with the doctor to get around this 13 14 requirement: "I was speaking to some of the other reps and their doctors are writing 15 for this, that, and the other. Do they have cancer? I don't know, but they were 16 talking about sickle cell anemia." 17 18 190. After Hill provided an alternative to "not sound off-label" when 19 encouraging doctors writing SUBSYS for conditions other than breakthrough cancer 20 21 22 23 pain during the April 2013 conference meeting, Rowan allowed Hill to instruct the other representatives without interruption and did not indicate this method was inappropriate; instead, Rowan stated shortly after that a doctor who writes SUBSYS 24 25 26 is not worried about its indication. 191. Following the conversation regarding how to encourage doctors to write 27 28 SUBSYS prescriptions for sickle cell anemia in the conference meeting on or around SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 37 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW) Document 33 Filed 06/13/16 Page 48 of 139 Page ID #:418 1 April 18, 2013, a member of the South East sales team mentioned that doctors just 2 want to hear the indication first, and then they are ready to listen to other uses, 3 4 followed by Rowan adding that "If you want to talk science, you're going to suck." 5 Targeting Doctors who are Not Oncologists or Pain Specialists. 6 192. INSYS has also pursued relationships with doctors who are not 7 8 9 oncologists or pain specialists knowledgeable of and skilled in the use of Schedule II opioids to treat cancer pain, as approved by the FDA. 10 193. In its September 29, 2008 press release regarding the FCA suit against 11 12 Cephalon, the DOJ stated that Cephalon's focus on physicians other than oncologists 13 14 constituted off-label marketing. 194. On February 21, 2013, IRC Prior Authorization Assistant Tamara 15 16 Kalmykova ("Kalmykova") emailed Guzman regarding one of Dr. Banchik's 17 18 patients, stating that the approval request was denied partly because Medicaid 19 identified Dr. Banchik as a neurologist and required proof that Dr. Banchik 20 21 specialized in pain management. 22 23 195. Dr. Banchik is neurologist at the Neurology Centers of Palm Beach, as stated on her patient forms and on her biography on the Neurology Center's website. 24 196. The Neurology Centers of Palm Beach's website indicates that Dr. 25 26 Banchik has experience with and provides lectures on pain management, but that her 27 28 primary background is in neurology, which includes the specialty area of headaches. SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 38 CASENo .. CV 13-5861 GHK (AJWX) ---~---------- ·----~ ~---- Case 2:13-cv-05861-JLS-AJW ) Document 33 Filed 06/13/16 Page ) 49 of 139 Page ID #:419 197. The Neurology Center of Palm Beach's website does not list cancer 1 2 treatment as a specialty area, although it does list headaches/migraines and various 3 4 forms of injuries as areas of focus for the Neurology Center's physicians. 5 6 198. INSYS is targeting doctors who are not oncologists or pain management physicians specializing in cancer treatment and who likely see far more neurological 7 8 patients than cancer patients. 9 199. The FDA contraindicated SUBSYS for acute pain stemming from 10 11 migraines or headaches, due to the serious consequences that could result from 12 prescribing SUBSYS to patient not on a chronic regiment of opioids for cancer 13 14 treatment. 200. Dr. Banchik mentioned to Guzman in August 2012 that doctors who 16 were unable to prescribe SUBSYS could refer their patients to her to write the 17 18 prescription, which indicates that Dr. Banchik was likely unfamiliar with these 19 referred patients' particular histories, which thus increases the chances of SUBSYS 20 21 22 causing serious side effects in these new patients who doctors unfamiliar with SUBSYS referred specifically for such a prescription. 23 201. INSYS's pursuit of relationships with non-FDA approved doctors is not 24 25 an uncommon practice for the company. 26 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 39 CASENo .. CV 13-5861 GHK (AJWX) ------ ----- - Case 2:13-cv-05861-JLS-AJW ) Document 33 Filed 06/13/16 Page 50 of 139 Page ID #:420 1 2 202. On or around August 16, 2012, National Trainer Hill admitted in a text message to Guzman that none of the attendees at a speaker program she had recently 3 4 5 conducted were oncologists or pain specialists. 203. Hill serves as the INSYS National Trainer and was a former Cephalon 6 employee, who should be aware of FDA standards. 7 8 9 204. On or around April 19, 2013 during the Arizona conference, a South East Region sales representative stated that she had a neurologist that was prescribing 10 11 12 13 1600 mcg for a patient. INSYS's Off-Label Marketing Results in Doctors Prescribing SUBSYS for Contraindications, Off-Label Use, and Over-Titrating. 14 15 205. INSYS's off-label marketing schemes have resulted in doctors writing 16 17 prescriptions for contraindicated uses, such as postoperative pain, and for off-label 18 uses, such as back pain. 19 206. INSYS has also crafted the "kiss of death" and "effective dosage" 20 21 messages, which encourage doctors to start patients at a higher dose than 100 mcg 22 and/or titrate patients quickly, which is counter to the FDA dosage instructions and 23 24 can be very dangerous with such a potent opioid agonist. 25 26 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT 40 ------~1-1------~--·-- UNDER SEAL CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW ) Document 33 Filed 06/13/16 Page 51 of 139 Page ID #:421 Prescriptions for Contraindications. 1 2 207. SUBSYS is contraindicated for postoperative pain and for 3 4 5 headaches/migraines because life-threatening respiratory depression and death could occur in patients. 6 208. INSYS ignores the FDA contraindications warnings and encourages 7 8 doctors to recommend SUBSYS for such uses, which has resulted in prescriptions for 9 contraindicated conditions. 10 11 209. On or around February 21, 2013, Kalmykova emailed Guzman regarding 12 one of Dr. Banchik's Medicaid patients, stating that his approval request had been 13 14 denied because the office notes focused on the patient's knee surgery rather than the 15 cancer diagnosis, under which the request was filed. 16 210. Dr. Banchik's Medicaid patient whom Kalmykova emailed Guzman 17 18 about on or around February 21, 2013 had previously had cancer but the SUBSYS 19 prescription was to treat the patient's post-operation pain following knee surgery. 20 21 22 23 211. Kalmykova also indicated in her email to Guzman on or around February 21, 2012 that the IRC needed office notes that supported the correct diagnosis (cancer), thus impliedly asking Guzman and Dr. Banchik to alter office 24 25 notes that had stated the actual purpose for the Medicaid patient's prescription (post- 26 27 operative pain) so the request would fit CMS's approval requirements. 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT 41 ~-----~,,----·----·--- UNDER SEAL CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW ) Document 33 Filed 06/13/16 Page 52 of 139 Page ID #:422 1 212. On or around March 18, 2013, Kalmykova followed up with Guzman 2 regarding Dr. Banchik's Medaid patient, asking Guzman ifINSYS now had all the 3 4 5 required documentation from Dr. Banchik, especially because "the patient has actually tried the medication due to the one time approval that we got from his work 6 comp back in February." 7 213. The February 2012 prior authorization for SUBSYS Dr. Banchik's 8 9 Medicaid patient received through worker's compensation was not for treatment of 10 11 the patient's cancer pain, but rather for his knee injury. 12 214. The Relator believes that the initial prescription for Dr. Banchik's 13 14 Medicaid patient in February 2012 was 200 mcg, 30 units. 215. According to an email from Burlakoff on May 13, 2012, 30 units of 15 16 SUBSYS at a 200 mcg dose costs about $900 dollars and 120 units at a 400 mcg dose 17 18 costs approximately $5,100. 19 Prescriptions for Off-Label Uses. 20 216. The treatment of back pain is one of the primary off-label uses for which 21 22 doctors prescribe SUBSYS. 23 217. On or around April 18, 2013 during the Arizona INSYS conference, 24 25 management and sales representatives discussed a method for encouraging doctors to 26 prescribe SUB SYS for the off-label use of treating back pain: instruct the physician 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 42 CASENo .. CV 13-5861 GHK (AJWX) ====~···=··=--=-11 ==---~- Case 2:13-cv-05861-JLS-AJW) Document 33 Filed 06/13/16 Page ) 53 of 139 Page ID #:423 1 to ask the patient if there was anything they could not do during the day because of 2 their back. 3 4 5 6 218. During this conference meeting on or around April 18, 2013, Hill and Tondre stated representatives could rephrase this by asking if the patient was restricted from doing anything because of pain or asking about the patient's 7 8 9 "functionality." 219. After Tondre provided an alternative method for promoting SUBSYS for 10 11 the off-label use of back pain, Rowan stated that INSYS was lucky to have Tondre's 12 knowledge and then instructed the representatives to paint a picture and allow the 13 14 15 16 doctor "to go there themselves." 220. INSYS's instructions to representatives on how they can sell SUBSYS for non-FDA approved uses without "sounding off-label" and marketing SUBSYS by 17 18 utilizing the mantra "pain is pain" has resulted in a substantial number of off-label 19 prescriptions, many for Medicare and Medicaid patients. 20 21 22 23 221. In order to enroll in the REMS program and be authorized by the FDA to prescribe SUBSYS, physicians must sign a TIRF form stating that he or she understands the SUBSYS indication. 24 25 26 222. On or around March 6, 2013, Dr. Gatz prescribed SUBSYS for a Medicare patient using diagnosis codes 724.2 (lumbago), 722.52, and 721.3 for 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 43 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page ) 54 of 139 Page ID #:424 1 "lumbosacral spondylosis" and "lumbar radiculopathy," which are, respectively, a 2 degenerative condition affecting the lower spine and lower-back nerve root pain. 3 4 5 6 223. On or around March 11, 2013, Dr. Gatz prescribed 600 mcg ofSUBSYS for a Medicare patient with chronic pain; a staff member in Dr. Gatz's office confirmed in a March 18, 2013 text message to Guzman that the patient had chronic 7 8 pain and not cancer. 9 224. On or around April 11, 2013, Doctor Daniel Ettedgui ("Dr. Ettedgui'') 10 11 prescribed 800 mcg of SUB SYS for a Medicare patient with the diagnosis codes of 12 "Amputation of Leg Above Knee 897.2; Lumbosacral Plexus Lesions 353.1; Sciatica 13 14 15 16 Neuralgia 724.3; Lumber Radiculopathy 724.4." 225. On or around April 12, 2013 INSYS Director of Managed Markets Mike Grury ("Grury") sent Burlakoff and Guzman text messages stating that Jessica 17 18 Chavez from the IRC contacted Medicare in order to get the patient approved for a 19 voucher, which INSYS can use to sway the patient's purchasing decision and 20 21 22 23 potentially dissuade them from less expensive alternatives and generic medications. 226. On December 18, 2012, in text messages between Jay Patel ("Patel") from Apex Pharmacy and Guzman, Patel confirmed that the diagnosis provided by 24 25 26 Dr. Gatz for a SUB SYS prescription was for patient Joseph Leo's back pain. 227. On February 11, 2013, a staff member from Dr. Gatz's office sent 27 28 Guzman a text message stating that they had just found out that patient Joseph Leo SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 44 CASENo . . CV 13-5861 GHK (AJWX) ·==='--'----'----=====1-1·-------- ---- - Case 2:13-cv-05861-JLS-AJW ) Document 33 Filed 06/13/16 Page ) 55 of 139 Page ID #:425 1 had cancer, verifying that Dr. Gatz had previously prescribed SUB SYS for the off2 label use of treating his back pain. 3 Falsification of Documents to CMS. 4 5 6 228. The IRC used Dr. Gatz's new cancer diagnosis for Joseph Leo to continue obtaining approval for the patient's SUBSYS prescription to treat his back 7 8 9 pain, particularly because the IRC stated at the April 2013 conference that the department reviews patients' medical information to find cancer to obtain prior 10 11 12 authorization. 229. The Relator possess knowledge of at least one instance in which the IRC 13 14 utilized a previous cancer diagnosis or a cancer diagnosis found after the patient 15 already received SUBSYS to treat a non-cancer condition in order to gain prior 16 authorization from CMS for the non-cancer use through falsification of documents. 17 18 19 230. In or around late April or early May 2013, the IRC filled out a prior authorization form and identified the diagnosis as cancer; however, upon receiving 20 21 22 23 the form, Dr. Gatz's office whited out the cancer diagnosis and wrote "chronic pain," as this was the reason Dr. Gatz had prescribed SUBSYS. 231. In or around late April or early May 2013, after Dr. Gatz modified the 24 25 prior authorization to reflect "chronic pain" as the diagnosis, the IRC indicated to 26 CMS that the form was incorrect and sent a "corrected" form, with the cancer 27 28 diagnosis, to CMS. SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 45 CASENo .. CV 13-5861 GHK (AJWX) . -------------- - - ------ ------ Case 2:13-cv-05861-JLS-AJW) Document 33 Filed 06/13/16 Page ) 56 of 139 Page ID #:426 1 232. While Dr. Gatz did not participate in the falsification of the prior 2 authorization form sent to CMS in or around April or May 2013, he and the IRC have 3 4 5 6 worked together in other cases to submit false information to CMS. 233. On or around December 18, 2012, Dr. Gatz filled out an IRC prior authorization form for a patient and identified the diagnosis as "neoplastic pain," 7 8 which matches code 338.3 (Breakthrough Cancer Pain) that the IRC included in the 9 Medicare form for the same patient on or around December 21, 2012. 10 11 234. Dr. Gatz's January 23, 2013 Patient Face Sheet (which provides 12 background information on the client) for the patient with the December 2012 13 14 neoplastic pain diagnosis, uses diagnosis codes 719.48 (pain injoint) and 337.00 15 (nerve damage). 16 235. The difference in the diagnosis codes used on the forms submitted to 17 18 CMS by the IRC and Dr. Gatz with the Patient Face Sheet indicates that Dr. Gatz was 19 prescribing SUBSYS for nerve and joint pain, but he and the IRC were using the 20 21 cancer diagnosis to obtain CMS approval. 22 Switching Patients from Actig Indicates the Large Number of Medicare and 23 Medicaid Patients being Prescribed SUBSYS. 24 25 26 236. One of INSYS 's primary marketing plans is to encourage doctors to switch patients from Actiq and Fentora to SUBSYS. 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 46 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW) Document 33 Filed 06/13/16 Page ) 57 of 139 Page ID #:427 23 7. During a conference call on or around December 12, 2012, Guzman sent 1 2 a text message to Hill stating that most patients using Actiq are on Medicare or 3 Medicaid, in response to management instructing the sales representatives on the call 4 5 to switch Actiq patients to SUBSYS while also stating that compliance issues existed 6 7 when offering Medicare and Medicaid patients SUBSYS. 238. INSYS has been successful in inducing doctors to switch patients from 8 9 Actiq to SUBSYS, including Dr. Liporace, Dr. Krost, Dr. Banchik, and Dr. Gatz in 10 11 Guzman's territory alone. 12 239. On or around February 11, 2013, Dr. Gatz prescribed 100 mcg of 13 14 SUBSYS for a Medicare patient. 240. On or around March 19, 2013, Dr. Banchik prescribed SUBSYS for a 15 16 Medicaid cancer patient. 17 241. Guzman is informed and based thereon alleges that Medicare and 18 19 Medicaid patients account for a substantial amount of SUBSYS purchasers in her 20 21 territory and all over the country. 22 23 242. INSYS management, such as Burlakoff, are careful to officially state that vouchers and other incentives cannot be given to Medicare or Medicaid patients 24 25 for compliance reasons but management encourages and/or is aware that vouchers 26 and incentives are provided to persuade Medicare and Medicaid to purchase 27 28 SUBSYS. SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 47 CASENo . . CV 13-5861 GHK (AJWX) ----- ----- -- -- ---~ Case 2:13-cv-05861-JLS-AJW ) Document 33 Filed 06/13/16 Page 58 of 139 Page ID #:428 ) 1 243. On December 12, 2012, a concerned Guzman sent Burlakoff a text 2 message stating that Dr. Banchik had "put a bunch [of] Medicare patients" on free 3 4 SUB SYS product, to which Burlakoff responded that he spoke with Babich and that 5 it was fine. 6 7 8 Titration and Over-Prescribing. 244. INSYS disregards the FDA's titration warning and encourages doctors 9 10 to prescribe strong doses of SUBSYS. 11 245. The FDA states on the SUBSYS label that the initial dose to treat 12 13 14 episodes of breakthrough cancer pain is always 100 mcg. 246. The SUBSYS label instructs doctors to prescribe the initial titration 15 16 supply of 100 mcg SUBSYS units, which limits the number of units in the home 17 during titration, and to avoid prescribing a higher does until patients have used up all 18 units to prevent confusion and possible overdose. 19 20 21 24 7. The FDA states that patients should take a maximum of two doses of SUBSYS for any breakthrough pain episode. 22 23 24 25 248. In or around August 2012, INSYS created a new marketing tactic referred to as the "effective dosage" or "the kiss of death" message. 249. The effective dosage message and the kiss of death consists of telling 26 27 doctors that 100 mcg is not effective for pain relief and continually pushing them to 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 48 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 59 of 139 Page ID #:429 1 titrate to higher dosages, with the "magic number" referred to in the April 2013 2 Arizona conference as 800 mcg. 3 250. As part of the effective dosage message or kiss of death campaign, 4 5 6 INSYS sends a "Daily Rep Report for Low Strength Use" via email every day for dosages at or below 400 mcg to sales representatives. 7 251. While INSYS refrains from referencing the kiss of death or the effective 8 9 dosage message in official emails and statements, INSYS management encourages 10 11 this marketing scheme in person, over the telephone, and through some text 12 messages. 13 252. On or around August 24, 2012, Burlakoff sent a text message to Guzman 14 15 and other representatives stating, "We will do the Matt 16 Napolitano/Marketing/effective dose message." 17 18 253. Napoletano is a former Cephalon marketing executive. 19 254. On or around September 6, 2012, Burlakoff sent a text message to 20 21 22 23 Guzman and other sales professionals stating that INSYS would "get together as a whole company, and review 'effective dose message;"' indicating that this message is used throughout INSYS. 24 255. INSYS's off-label marketing titration campaign has resulted in doctors 25 26 starting patients on SUBSYS dosages that are higher than the FDA-approved 100 27 28 mcg. SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 49 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page ) 60 of 139 Page ID #:430 1 2 256. On or around May 13, 2013, Burlakoff sent an email containing a chart of twelve new patients for the week of May 11, all of which were trying SUBSYS for 3 4 5 the first time. Only one individual had 100 mcg listed under the "strength" column, with the other eleven patients receiving strengths between 200 mcg and 1600 mcg, 6 with the average dosage level at approximately 600 mcg. 7 8 9 257. On or around March 1, 2013, Guzman received a voicemail from Patel of Apex Pharmacy stating that the 1200 mcg dosage of SUBSYS for a patient was 10 11 too high, and that if the prior authorization had not been completed, that INSYS 12 should hold off and return the patient to 800 mcg. 13 14 258. In or around March 2013, Burlakoff sent an email congratulating one 15 individual who had encouraged a doctor to switch a patient from 1600 mcg of Actiq 16 to a SUBSYS prescription that would be titrated to 1200 mcg, and then stated "Cha 17 18 Ching again!" for the $40,320 that INSYS would make from the sale to this patient. 19 259. On or around April 12, 2013, Hill told Guzman during a conversation 20 21 22 23 that the 10-pack of SUB SYS was only to discourage a patient from staying on 100 mcg and was to force them to go up in strength. 260. During the conversation on or around April 12, 2013, Hill told Guzman 24 25 that Linden Care, upon which INSYS is increasingly relying =to supply SUBSYS, 26 will only dispense a 10-pack of 100 mcg or 200 mcg and up. 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 50 CASENo .. CV 13-5861 GHK (AJWX) \ Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 61 of 139 Page ID #:431 l ) 1 261. On or around April 18, 2013, Rowan instructed representatives during 2 the INSYS conference to "increase the strength as much as possible - that will give 3 4 5 6 you the most bang for your buck." 262. On or around April 18, 2013, one sales representative stated during a conference meeting that a doctor had prescribed a 1200 mcg and a 600 mcg dose to a 7 8 patient, with one being covered by insurance and the other being covered out-of9 pocket. 10 11 263. On the SUBSYS label, the FDA states that, "To reduce the risk of 12 overdose during titration, patients should have only one strength of SUB SYS 13 14 15 16 available at any time." 264. After the representative mentioned the dual doses for one patient during the April 2013 conference meeting, Rowan and Gurrieri offered a way around the 17 18 FDA and CMS standards by stating that one prescription could be filled one day and 19 the second could be filled the next. 20 21 22 23 265. On or around April 18, the sales representative stated during the conference meeting that the doctor had switched the patient with two prescriptions doses from another fentanyl product, but prescribed the same amount of mcg for 24 25 26 SUBSYS. 266. The SUBSYS label states that, "When prescribing, do not switch 27 28 patients on a mcg per mcg basis from any other oral transmucosal fentanyl product to SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 51 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page ) 62 of 139 Page ID #:432 1 SUBSYS;" the FDA warns against this under the "Medication Errors" portion of the 2 label, stating in bold that this can result in a fatal overdose. 3 4 COUNT I: FALSE CLAIMS ACT VIOLATIONS 5 31 U.S.C. § 3729(a)(l) Against 6 Defendants 7 8 9 10 267. Guzman realleges and incorporates the allegations set forth above as though fully set forth therein. 268. Defendants knowingly caused to be presented to the United States 11 12 Government false or fraudulent claims for payment or approval under the federally13 14 15 funded Medicaid and Medicare programs in violation of31 U.S.C. § 3729(a)(l) when INSYS violated 42 U.S.C. § 1320a-7b with its structured kickback system to induce 16 doctors to recommend SUBSYS because 42 U.S.C. § 1320a-7b(g) provides that a 17 18 19 20 claim that includes items or services resulting from a violation of this section constitutes a false or fraudulent claim for purposes of the federal False Claims Act. 269. Defendants knowingly offered kickbacks to doctors when its managers 21 22 instructed representatives to offer incentives to doctors in exchange for SUBSYS 23 prescriptions, even though INSYS management knew this violated FCA laws, 24 25 26 27 including during the April 2013 conference when Rowan told representatives not to "put in black and white" that speaker programs and fees are based on the amount of SUBSYS a doctor prescribes. 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 52 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW ) Document 33 Filed 06/13/16 Page ) 63 of 139 Page ID #:433 1 2 270. INSYS management and sales representatives shared methods in which to maneuver around anti-kickback standards and compliance laws, such as ordering 3 4 meals during lunch as to-go orders but instructing the restaurant to credit the 5 representative when they later brought in just the doctor and his or her spouse, or by 6 ordering televisions through caterers for speaker programs. 7 8 9 271. INSYS management was aware of FCA laws and compliance standards but justified its instructions to sales representatives to violate such laws a standards, 10 11 such as when Regional Sales Manager Rowan stated during the April 2013 12 conference that he did not believe he was doing anything wrong because he was 13 14 inducing doctors with food, and then stated that he was not asking the sales 15 representatives to do anything wrong, just to be aware of how they can be a top sales 16 person. 17 18 272. Defendants knowingly caused to be presented to the Government false 19 or fraudulent claims for payment or approval under the federally-funded Medicaid 20 21 22 23 program when in or around February 21, 2013, it submitted to CMS forms indicating that a previous cancer diagnosis was the reason for Dr. Banchik prescribing SUBSYS for a Medicaid patient when the prescription was being used to treat postoperative 24 25 knee pain, a contraindicated use; this practice is widespread throughout INSYS, 26 particularly because the IRC obtains approval from Medicaid and Medicare for the 27 28 entire company. SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT 53 UNDER SEAL CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW ) Document 33 Filed 06/13/16 Page ) 64 of 139 Page ID #:434 1 273. Defendants knowingly caused to be presented to the Government false 2 or fraudulent claims for payment or approval when in late April or early May 2013, 3 4 the IRC filled out a prior authorization form and identified the diagnosis as cancer on 5 the form but Dr. Gatz later whited out the cancer diagnosis and wrote "chronic pain" 6 7 (the reason for the SUBSYS prescription); the IRC told CMS that the form was 8 incorrect with the chronic pain diagnosis and sent a "corrected" form. This practice 9 is widespread throughout INSYS, particularly because the IRC obtains approval from 10 11 12 Medicaid and Medicare for the entire company. 274. Defendants knowingly caused to be presented to the Government false 13 14 or fraudulent claims for payment or approval when in or around December 18, 2012, 15 the IRC, working with Dr. Gatz, submitted to CMS prior authorization and Medicare 16 forms indicating that the patient's diagnosis was neoplastic pain when Dr. Gatz' s 17 18 Patient Face Sheet noted that the patient had joint and nerve pain, a Sheet to which 19 the IRC had access; this practice is widespread throughout INSYS, particularly 20 21 22 23 because the IRC obtains approval from Medicaid and Medicare for the entire company. 275. Defendants knowingly caused to be presented to the Government false 24 25 or fraudulent claims for payment or approval when it engaged in off-label marketing, 26 such as failing to meet the off-label dissemination requirements of 21 U.S.C. 27 28 §360aaa, distributing misbranded drugs in violation of 21 U.S.C. §33 l(a), and SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 54 CASENo . . CV 13-5861 GHK (AJWX) - - ---·---- ----~----- ·-- -·--~ -~~~- Case 2:13-cv-05861-JLS-AJW) Document 33 Filed 06/13/16 Page ) 65 of 139 Page ID #:435 1 encouraged doctors to prescribe SUBSYS for uses it knew were not approved by the 2 FDA and assisted through the IRC in obtaining and approval and payment from 3 4 5 Medicaid and Medicare for SUBSYS prescriptions for non-approved uses in violation of 42 U.S.C §1396r-8(k)(3) and 42 U.S.C. §§ 1395w-102- §1395w-104. 6 276. The United States, unaware of the falsity of the claims and/or statements 7 8 made by Defendants and in reliance on the accuracy thereof, paid Defendants for 9 such false or fraudulent claims. 10 11 277. By reasons of the acts and conduct of Defendants in violation of 31 12 U.S.C. § 3729(a)(l), the United States has suffered actual damages, including the 13 14 total amounts paid in response to all such false or fraudulent claims for payment. In 15 addition, the United States is entitled to recover civil money penalties, and other 16 monetary relief as deemed appropriate. 17 18 COUNT II: OFF-LABEL DISSEMINATION VIOLATIONS 19 21 U.S.C. §360aaa Against Defendants 20 21 22 278. Guzman realleges and incorporates the allegations from Paragraphs 1 through 266, inclusive, as though fully set forth therein 23 24 25 26 279. A manufacturer may disseminate information concerning the safety, effectiveness, or benefit of a use not described in the approved labeling only if: (1) there is an application filed pursuant to 21 U.S.C. § 355; (2) the information meets 27 28 the requirements of21 U.S.C. § 360aaa-1; (3) the information is not derived from SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 55 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 66 of 139 Page ID #:436 1 clinical research conducted by another manufacturer or permission has been given to 2 use such information; (4) the manufacturer has, within 60 days before dissemination 3 4 5 6 submitted to the Secretary (A) a copy of the information to be disseminated and (B) any clinical trial information relating to the safety or effectiveness of the new use; (5) the manufacturer has complied with section 360aaa-3; (6) along with the information 7 8 9 on the new use to be disseminated, the manufacturer includes a statement disclosing (A)(i) that the use in not approved, (ii) that the information is being disseminated at 10 11 the manufacturer's expense, (iii) the names of the authors who have received 12 compensation from the manufacturer, (iv) the official labeling for the drug, (v) a 13 14 statement that there are products or treatments that have been approved for the use, 15 (vi) identification of any person that provided funding for the research, and (B) a 16 bibliography of other articles that have been published about the use of the drug. 17 280. Defendants did not satisfy these requirements before encouraging 18 19 doctors to prescribe SUBSYS for contraindicated and off-label uses, such as for 20 21 22 23 postoperative pain and back pain, and before it pursued doctor who were neither oncologist nor pain management specialists knowledgeable in opioids to prescribe SUBSYS for patients, including those insured by Medicare and Medicaid, and 24 25 therefore violated 21 U.S.C. § 360aaa. 26 281. Because Defendants did not meet the 21 U.S.C. § 360aaa dissemination 27 28 requirements and thus engaged in off-label marketing of SUBSYS, they violated 31 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 56 CASENo .. CV 13-5861 GHK (AJWX) ------------- ----- -- - ----- ----------------- Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page ) 67 of 139 Page ID #:437 1 U.S.C. § 3729(a)(l) by knowingly presenting or causing to be presented to the United 2 States Government false or fraudulent claims for payment or approval under the 3 4 federally-funded Medicaid and Medicare programs. 5 COUNT III: MEDICAID NON-APPROVED USE VIOLATIONS 6 42 U.S.C. § 1396r-8(k)(3) Against Defendants 7 8 282. Guzman realleges and incorporates the allegations from Paragraphs 1 9 through 266, inclusive, as though fully set forth therein 10 283. Reimbursement by Medicaid is, with only one rare exception (an 11 12 anticancer chemotherapeutic regimen), prohibited if the drug is not being used for a 13 14 medically accepted indication. 42 U.S.C. § 1396r-8(k)(3). 15 284. 42 U.S.C. § 1396r-8 (k)(6) defines a medically accepted indication as one 16 17 which is approved under the Food, Drug, and Cosmetic Act. 285. The FDA approved SUBSYS for the limited use of treatment for 18 19 breakthrough pain in cancer patients. 20 286. INSYS management instructed sales representatives on and allowed 21 22 former Cephalon employees to share methods for promoting SUBSYS to doctors for 23 24 off-label and contraindicated uses without sounding "off-label," including at the April 25 2013 INSYS conference in Arizona and during an early 2013 conference call in 26 which former Cephalon employee Dan Tondre explained his sales motto "pain is 27 28 pain." SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 57 CASE No .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page ) 68 of 139 Page ID #:438 287. During the April 2013 INSYS conference in Arizona, Defendants 1 2 instructed sales representatives on methods for promoting SUBSYS for treating 3 sickle cell anemia and back pain, neither of which were conditions approved or 4 5 indicated by the FDA for SUBSYS use. 6 288. During the April 2013 INSYS conference in Arizona, Manager Joe 7 8 Rowan told sales representatives, "I don't want to know what you do," but stated that 9 they should do what they need to, but "it's not on me." 10 289. Defendants are aware that doctors are prescribing SUBSYS for off-label 11 12 and contraindicated uses for Medicaid patients, which is prohibited by 42 U.S.C. 13 §1396r-8(k)(3), encourages doctors to write and continue writing these prescriptions, 14 15 and assists them in gaining authorizations for the off-label and contraindicated 16 prescriptions through the IRC. 17 290. In February 2013, the IRC worked to obtain CMS approval for a 18 19 Medicaid patient of Dr. Banchik's to treat the pain he experienced following knee 20 surgery by using the patient's past history of cancer. 21 22 291. The FDA contraindicates SUBSYS for the use in treating postoperative 23 pam. 24 292. The FDA states that SUBSYS is to be prescribed by oncologist or pain 25 26 specialists familiar with opioids. 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 58 CASENo .. CV 13-5861 GHK (AJWX) . ----------------- -- --- -- Case 2:13-cv-05861-JLS-AJW ) Document 33 Filed 06/13/16 Page ) 69 of 139 Page ID #:439 , 293. Defendants pursued relationships with non-oncologists, such as 1 2 neurologists, for the purpose of encouraging those doctors to prescribe SUBSYS. 3 294. Medicaid patients account for a significant portion of SUBSYS users. 4 5 295. Defendants violated 42 U.S.C. § 1396r-8(k)(3) when they encouraged 6 doctors to prescribe SUBSYS for uses they knew were not approved by the FDA and 7 assisted through the IRC in obtaining approval and payment from Medicaid for 8 9 SUBSYS prescriptions for non-approved uses. 10 296. Because Defendants violated 42 U.S.C. § 1396r-8(k)(3) by encouraging 11 12 doctors to prescribed SUSYS for non-approved uses and assisted doctors in obtaining 13 14 approval and payment for non-approved uses, they also violated 31 U.S.C. § 15 3729(a)(l) by knowingly presenting or causing to be presented to the United States 16 Government false or fraudulent claims for payment or approval under the federally- 17 18 funded Medicaid program. 19 COUNT IV: MEDICARE NON-APPROVED USE VIOLATIONS 20 42 U.S.C. §§ 1395w-102 - §1395w-104 Against Defendants 21 22 297. Guzman realleges and incorporates the allegations from Paragraphs 1 23 24 through 266, inclusive, as though fully set forth therein 25 26 298. Medicare Part D, 42 U.S.C. §§1395w-102- §1395w-104, states that a plan sponsor is required to provide coverage of qualified prescription drugs. 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 59 CASENo .. CV 13-5861 GHK (AJWX) ------------ --- -- ---- --- ' ) Document 33 Filed 06/13/16 Page 70 of 139 Page ID #:440 Case 2:13-cv-05861-JLS-AJW ) 299. The definition for a covered Medicare drug is outlined in 1395w-102(e), 1 2 which includes the term "medically accepted indication." 3 300. 42 U.S.C. § 1396r-8 (k)(6) defines a medically accepted indication as one 4 5 which is approved under the Food, Drug, and Cosmetic Act. 6 301. The FDA approved SUBSYS for the limited use of treatment for 7 8 breakthrough pain in cancer patients. 9 302. INSYS management instructed sales representatives on and allowed 10 11 former Cephalon employees to share methods for promoting SUBSYS to doctors for 12 off-label and contraindicated uses without sounding "off-label," including at the April 13 14 2013 INSYS conference in Arizona and during an early 2013 conference call in 15 which former Cephalon employee Dan Tondre explained his sales motto "pain is 16 pain." 17 18 303. During the April 2013 INSYS conference in Arizona, Defendants 19 instructed sales representatives on methods for promoting SUBSYS for treating 20 21 22 23 24 25 26 sickle cell anemia and back pain, neither of which were conditions approved or indicated by the FDA for SUBSYS use. 304. During the April 2013 INSYS conference in Arizona, Manager Joe Rowan told sales representatives, "I don't want to know what you do," but stated that they should do what they need to, but "it's not on me." 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 60 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 71 of 139 Page ID #:441 ) 1 305. Defendants' off-label marketing has resulted in doctors prescribing 2 SUBSYS for off-label uses, such as Dr. Gatz writing SUBSYS prescriptions for 3 4 5 6 7 8 9 Medicare patients to treat their back and chronic pain and Dr. Ettedgui prescribing SUBSYS for a Medicare patient to treat his post-amputation and lower-back pain. 306. Defendants are aware that doctors are prescribing SUBSYS for off-label and contraindicated for Medicare patients, which is prohibited by 42 U.S.C. §§1395w-102- §1395w-104, and encourages them to write and continue writing 10 11 these prescriptions, and assists them in gaining authorizations for these off-label and 12 contraindicated prescriptions through the IRC. 13 14 307. In or around December 18, 2012, the IRC and Dr. Gatz submitted forms 15 to Medicare indicating that the patient's diagnosis was neoplastic pain in order to 16 gain approval for the SUBSYS prescriptions; however, Dr. Gatz's Patient Face Sheet 17 18 indicated that the patient had joint and nerve pain, which are off-label uses. 19 308. The FDA states that SUBSYS is to be prescribed by oncologist or pain 20 21 22 23 specialists familiar with opioids. 309. Defendants pursued relationships with non-oncologists, such as neurologists, for the purpose of encouraging those doctors to prescribe SUBSYS. 24 25 310. Medicare patients account for a significant portion of SUB SYS users. 26 311. Defendants violated 42 U.S.C. § 1395w-102 when they encouraged 27 28 doctors to prescribe SUBSYS for uses it knew were not approved by the FDA and SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 61 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW) Document 33 Filed 06/13/16 Page 72 of 139 Page ID #:442 1 assisted through the IRC in obtaining approval and payment from Medicare for 2 SUBSYS prescriptions for non-approved uses. 3 4 5 6 312. Because Defendants violated 42 U.S.C. § 1395w-102 by encouraging doctors to prescribed SUSYS for non-approved uses and assisted doctors in obtaining approval and payment for non-approved uses, they also violated 31 U.S.C. § 7 8 9 3729(a)(l) by knowingly presenting or causing to be presented to the United States Government false or fraudulent claims for payment or approval under the federally- 10 11 12 13 14 funded Medicare program. COUNTV: VIOLATION OF THE CALIFORNIA FALSE CLAIMS ACT (Cal. Gov't. Code§ 1265l(a)(l)) 15 16 313. The allegations of paragraphs 1 through 266 are realleged as if fully 17 18 19 20 21 22 23 24 25 set forth herein. The California False Claims Act provides, in pertinent part, that: (a) Any person who commits any of the following acts shall be liable to the state or to the political subdivision for three times the amount of damages which the state or the political subdivision sustains because of the act of that person. A person who commits any of the following acts shall also be liable to the state or to the political subdivision for the costs of a civil action brought to recover any of those penalties or damages, and may be liable to the state or political subdivision for a civil penalty ofup to ten thousand dollars ($10,000) for each false claim: 26 27 28 ( 1) Knowingly presents or causes to be presented to an officer or employee of the state or of any political SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 62 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page \ 73 of 139 Page ID #:443 ' subdivision thereof, a false claim for payment or approval. 1 2 (2) Knowingly makes, uses, or causes to be made or used a false record or statement to get a false claim paid or approved by the state or by any political subdivision. 3 4 5 6 (3) Conspires to defraud the state or any political subdivision by getting a false claim allowed or paid by the state or by any political subdivision. 7 8 9 (7) Knowingly makes, uses, or causes to be made or used a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the state or to any political subdivision. 10 11 12 13 14 Cal. Gov't. Code§ 12651. 314. By virtue of the conduct alleged herein, Defendants, and each of them 15 16 knowingly caused to be presented to California false claims for payment or 17 approval, in violation of Cal. Gov't. Code§ 1265l(a)(l). 18 315. Additionally, Defendants, and each of them gave or caused to be given 19 20 'kickbacks' to physicians and other licensed health care professionals to induce them 21 to prescribe Subsys in violation of state law, including Cal. Welfare & Inst. Codes 22 23 24 25 26 14107.2. 316. California paid the false claims because of the conduct of Defendants, and each of them. As a result of these payments and the conduct California has been 27 damaged in an amount to be determined at trial. 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 63 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW ) Document 33 Filed 06/13/16 Page ) 74 of 139 Page ID #:444 1 317. For each violation of the California False Claims Act, California is 2 entitled to recover treble damages from Defendants, and each of them. See Cal. 3 4 5 Gov't. Code§ 12651(a). 318. In addition, for each violation of the California False Claims Act, 6 California is entitled to recover from Defendants, and each of them costs of this 7 8 action, as well as a civil penalty ofup to $10,000.00 per false claim. Id. 9 COUNT VI 10 11 VIOLATION OF THE CALIFORNIA FALSE CLAIMS ACT (Cal. Gov't. Code§ 12651(a)(2)) 12 13 319. The allegations of paragraphs 1 through 266 are realleged as if fully 14 15 set forth herein. By virtue of the conduct alleged herein, Defendants, and each of 16 them knowingly made or used, or knowingly caused to be made or used, false records 17 18 or statements to get false claims paid or approved by California, in violation of Cal. 19 Gov't. Code§ 1265 l(a)(2). 20 320. California paid the false claims because of the conduct of Defendants, 21 22 and each of them. As a result of these payments and the illegal conduct California 23 has been damaged in an amount to be determined at trial. 24 25 26 27 321. For each violation of the California False Claims Act, California is entitled to recover treble damages from Defendants, and each of them. See Cal. Gov't. Code§ 1265 l(a). 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 64 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 75 of 139 Page ID #:445 ) 322. In addition, for each violation of the California False Claims Act, 1 2 California is entitled to recover from Defendants, and each of them costs of this 3 4 action, as well as a civil penalty ofup to $10,000.00 per false claim. Id. 5 COUNT VII 6 VIOLATION OF THE CALIFORNIA FALSE CLAIMS ACT 7 (Cal. Gov't. Code § 12651(a)(3)) 8 9 10 323. The allegations of paragraphs 1 through 266 are realleged as if fully set forth herein. 11 324. By virtue of the conduct alleged herein, Defendants, and each of them 12 13 conspired to defraud California by getting false claims allowed or paid by California, 14 15 in violation of Cal. Gov't. Code§ 12651(a)(3). 16 California paid the false claims because of the conduct of Defendants, and each of 17 18 19 20 them. 325. As a result of these payments and the conduct of Defendants, and each of them, California has been damaged in an amount to be determined at trial. 21 22 23 326. For each violation of the California False Claims Act, California is entitled to recover treble damages from Defendants, and each of them. See Cal. 24 25 Gov't. Code§ 12651(a). 26 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 65 CASENo . . CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 76 of 139 Page ID #:446 ) 1 2 327. In addition, for each violation of the California False Claims Act,California is entitled to recover from Defendants, and each of them costs of this 3 4 action, as well as a civil penalty ofup to $10,000.00 per false claim. Id. 5 6 COUNT VIII VIOLATION OF THE CALIFORNIA FALSE CLAIMS ACT 7 (Cal. Gov't. Code§ 12651(a)(7)) 8 9 10 328. The allegations of paragraphs 1 through 266are realleged as if fully set forth herein. 11 12 329. By virtue of the conduct alleged herein, Defendants, and each of 13 them knowingly made, used, or caused to be made or used a false record or statement 14 to conceal, avoid, or decrease an obligation to pay or transmit money or property to 15 16 California, in violation of Cal. Gov't. Code§ 1265l(a)(7). 17 330. California paid the false claims because of the conduct of Defendants, 18 19 20 and each of them. 331. As a result of these payments California has been damaged in an amount 21 22 23 24 to be determined at trial. 332. For each violation of the California False Claims Act, California is entitled to recover treble damages from Defendants, and each of them. See Cal. 25 26 Gov't. Code§ 12651(a). 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 66 CASENo . . CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page ) 77 of 139 Page ID #:447 ) 1 2 333. In addition, for each violation of the California False Claims Act, California is entitled to recover from Defendants, and each of them costs of this 3 4 5 action, as well as a civil penalty ofup to $10,000.00 per false claim. Id. 334. WHEREFORE, Relator respectfully requests this Court to enter 6 judgment for California and against Defendants, and each of them on each of Counts 7 8 VI through IX of this Complaint, and impose damages and penalties in an amount 9 equal to three times the loss sustained by the California Medicaid Program ("Medi- 10 11 Cal"), plus penalties of $10,000 for each false claim or statement. 12 13 COUNTIX DELAWARE FALSE CLAIMS AND REPORTING ACT ("DFCA ") 14 (Del. C. 1201 et seq.) 15 16 335. The allegations of paragraphs 1 through 266are re-alleged as if fully set 17 18 19 20 21 22 23 24 25 26 27 28 forth herein. The DFCA provides, in pertinent part, that: (a) Any person who (1) knowingly presents, or causes to be presented, directly or indirectly, to an officer or employee of the Government a false or fraudulent claim for payment or approval; (2) knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government; (3) conspires to defraud the Government by getting a false or fraudulent claim allowed or paid; ... or (7) knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government, shall be liable to the Government for a civil penalty of not less SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 67 CASENo . . CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 78 of 139 Page ID #:448 ) 1 2 3 4 than $5,500 and not more than $11,000 for each act constituting a violation of this section, plus 3 times the amount of actual damages which the Government sustains because of the act of that person .... Del. C. § 1201-1202 5 6 7 336. Defendants, and each of them knowingly (1) knowingly caused false claims to be presented for payment; (2) knowingly caused false statements or records 8 9 1o 11 to be used to get false or fraudulent claims paid by the Medicaid program; (3) conspired to defraud the Government by getting a false or fraudulent claim paid; and/or (4) knowingly caused to be made or used false records or statements to avoid 12 13 or reduce the obligation to repay claims to the Delaware Medicaid Program. Since 14 this program is jointly funded by Delaware and the United States, Defendants, and 15 16 each of them, engaged in conduct which conduct directly resulted in significant 17 financial loss to the State of Delaware and the United States. 18 19 20 21 337. Additionally, Defendants, and each of them gave or caused to be given 'kickbacks' to physicians and other licensed health professionals to induce them to prescribe Subsys, in violation of state law, including 31 Del. C. § 1001 et seq. 22 23 338. For each violation of the DFCA, Delaware is entitled to recover treble 24 damages from Defendants, and each of them and a civil penalty of not less than 25 26 27 28 $5,500 and not more than $11,000 for each violation. 6 Del. C. 1201. 339. WHEREFORE, Relator respectfully requests this Court to enter judgment for the State of Delaware and against Defendants, and each of them and SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 68 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 79 of 139 Page ID #:449 ) ) 1 impose damages and penalties as follows: an amount equal to three times the loss 2 sustained by the Medicaid Program, plus penalties of $11,000 for each violation. 3 4 COUNTX 5 DISTRICT of COLUMBIA FALSE CLAIMS ACT (D.C. OFFICIAL CODE §§ 2-308.13 et seq.) 6 7 8 9 10 340. The allegations of paragraphs 1 through 266 are realleged as if full set forth herein. The DCFCA provides, in pertinent part, that: 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (a) Any person who commits any of the following acts shall be liable to the District for 3 times the amount of damages which the District sustains because of the act of that person. A person who commits any o f the following acts shall also be liable for the costs of a civil action brought to recover penalties or damages, and may be liable to the District for a civil penalty of not less than $5,000, and not more than $10,000 for each false claim for which the person ( 1) knowingly presents, or causes to be presented, to an officer or employee of the District a false claim for payment or approval; (2) knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the District; (3) Conspires to defraud the District by getting a false claim allowed or paid by the District; ... or (7) Knowingly makes or uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government, shall be liable to the District. 26 27 D. C. Code§ 2.308-14(a). 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAlNT UNDER SEAL 69 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW) Document 33 Filed 06/13/16 Page ) 80 of 139 Page ID #:450 1 2 341. Defendants, and each of them knowingly (1) knowingly caused false claims to be presented for payment; (2) knowingly caused false statements or records 3 4 5 6 to be used to get false or fraudulent claims paid by the Medicaid program; (3) conspired to defraud the District by getting a false or fraudulent claim paid; and/or (4) knowingly caused to be made or used false records or statements to avoid or 7 8 reduce the obligation to repay claims to the District's Medicaid Program. Since this 9 program is jointly funded by the District and the United States, Defendants, and each 10 11 of them, engaged in conduct which conduct directly resulted in significant financial 12 loss to the District of Columbia and the United States. 13 14 15 16 342. Additionally, Defendants, and each of them gave or caused to be given 'kickbacks' to physicians and hospitals to induce the physicians to purchase and/or prescribe Defendants, and each of them drugs, in violation of state law, including 17 18 D.C. Code§ 3-702 19 343. WHEREFORE, Relator respectfully requests this Court to enter 20 21 22 23 judgment for the District of Columbia and against Defendants, and each of them on each of the Counts of this Complaint, and impose damages and penalties in an amount equal to three times the loss sustained by the District of Columbia Medicaid 24 25 program, plus penalties of $10,000 for each false claim or statement. 26 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAJNT UNDER SEAL. 70 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 81 of 139 Page ID #:451 1 COUNT XI 2 VIOLATION OF THE FLORIDA FALSE CLAIMS ACT 3 §§ 68.081-.092, FLORIDA STATUTES 4 5 6 344. The allegations of paragraphs 1 through 266 are realleged as if fully set forth herein. 7 8 9 10 11 12 13 14 15 16 Fla. Stat. 68.082(2) provides liability for any person who (a) knowingly presents, or causes to be presented, to an officer or employee of an agency a false or fraudulent claim for payment or approval; (b) knowingly makes, uses, or causes to be made or sued, a false record or statement to get a false or fraudulent claim paid or approved by an agency; (c) conspires to submit a false or fraudulent claim to an agency or to deceive an agency for the purpose of getting a false or fraudulent claim allowed or paid ...is liable to the state for a civil penalty of not less than $5,500 and not more than $11,000 and for treble the amount of damages the agency sustains because of the act or omission of that person. 17 18 345. Defendants, and each of them knowingly made, used, or caused to be 19 20 21 22 23 24 25 made or used, false records or statements to conceal, avoid, or decrease an obligation to pay or transmit money to the State of Florida. 346. Defendants, and each of them knowingly presented or caused to be presented false claims for payment to the Florida Medicaid Program creating liability for a false claims action pursuant to §68.081, Fla. Stat., et. seq. 26 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 71 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 82 of 139 Page ID #:452 '\ ' 1 2 ) ) 347. As a result of the conduct of Defendants, and each of them, set forth in this count, the State of Florida paid the improper Medicaid claims and has suffered 3 4 5 actual damages. 348. Additionally, Defendants, and each of them gave or caused to be given 6 7 8 9 'kickbacks' to physicians and other licensed health professionals to induce them to prescribe Subsys in violation of state law, including Fla. Stat. §§ 409.920. 349. Pursuant to §§ 68.082(2) and 68.086, Fla. Stat., the Defendants, and 10 11 each of them, are liable for treble the actual damages sustained, not less than $5,500 12 and not more than $11,000 penalty per claim, all other relief set forth in said statutes, 13 14 15 16 prejudgment interest, attorneys' fees and court costs. 350. WHEREFORE, Relator respectfully requests that judgment be entered in favor of the State of Florida against Defendants, and each of them, as follows: 17 18 351. For treble the amount of the State of Florida's actual damages plus civil 19 penalties of $11,000.00 for each false claim submitted; for reasonable attorney's fees 20 21 and costs of this civil action; and for such other and further relief as the Court deems 22 just and equitable. 23 24 25 26 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 72 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 83 of 139 Page ID #:453 ) 1 COUNT XII 2 VIOLATION OF THE GEORGIA FALSE MEDICAID CLAIMS ACT 3 (GEORGIA CODE 49-4-168 et seq.) 4 5 6 3 52. The allegations of paragraphs 1 through 266are realleged as if fully set forth herein. This is a claim for treble damages and civil penalties under the Georgia 7 8 9 10 State False Medicaid Claims Act. 353. Section 49-4-168.1.(a) of the Georgia State False Medicaid Claims Act provides in pertinent part as follows: 11 12 13 14 15 16 17 18 19 20 21 22 23 Any person who: (1) Knowingly presents or causes to be presented to the Georgia Medicaid program a false or fraudulent claim for payment or approval; (2) Knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Georgia Medicaid program; (3) Conspires to defraud the Georgia Medicaid program by getting a false or fraudulent claim allowed or paid; (7) Knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay, repay or transmit money or property to the State of Georgia, 24 25 26 27 shall be liable to the State of Georgia for a civil penalty of not less than $5,500.00 and not more than $11,000.00 for each false or fraudulent claim, plus three times the amount of damages which the Georgia Medicaid program sustains because of the act of such person. 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 73 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 84 of 139 Page ID #:454 ) 1 2 ) Defendants, and each of them violated the provisions set forth hereinabove. 354. For each violation of the statute, the Commonwealth of Georgia is 3 4 entitled to recover treble damages from Defendants, and each of them. See §49-4- 5 168.1.(a) of the Georgia State False Medicaid Claims Act. 6 7 355. WHEREFORE, the Relator respectfully requests this Court to enter 8 judgment for the Commonwealth of Georgia and against Defendants, and each of 9 them for an amount of three times the amount of damages sustained by the 10 11 Commonwealth of Georgia and a civil penalty of $10,000 for each act of submitting 12 false statements by INSYS, Kapoor, Babich, and Burlakoff. 13 14 COUNT XIII 15 HAWAII FALSE CLAIMS ACT, 16 Haw. Rev. Stat.§ 661-21, et seq. 17 18 19 20 356. The allegations of paragraphs 1 through 266are realleged as if fully set forth herein. This is a claim for treble damages and civil penalties under the Hawaii False Claims Act. Haw. Rev. Stat. § 661-21, et seq. 21 22 357. Defendants, and each of them knowingly presented or caused to be 23 presented to an officer or employee of the state a false or fraudulent claim for 24 25 payment or approval. 26 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 74 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW ) Document 33 Filed 06/13/16 Page 85 of 139 Page ID #:455 ) I 1 358. Defendants, and each of them knowingly made, used, or caused to be 2 made or used, a false record or statement to get a false or fraudulent claim paid or 3 4 5 approved by the state. 359. Defendants, and each of them conspired to defraud the state by getting a 6 7 8 9 false or fraudulent claim allowed or paid. 360. The Hawaii Medicaid Program, unaware of the falsity or fraudulent nature of the claims caused by Defendants, and each of them, paid for claims that 10 11 12 otherwise would not have been allowed. 361. By reason of these payments, the Hawaii Medicaid Program has been 13 14 15 16 damaged in a substantial amount. 362. WHEREFORE, the Relator respectfully requests this Court to enter judgment for the State of Hawaii and against defendants Defendants, and each of 17 18 them for an amount of three times the amount of damages sustained by the State of 19 Hawaii and a civil penalty of $11,000 for each act of submitting false statements. 20 21 22 COUNT XIV ILLINOIS WHISTLE BLOWER REWARD AND PROTECTION ACT 23 24 25 363. The allegations of paragraphs 1 through 266are realleged as if fully set forth herein. 26 27 28 364. Section 3 of the Illinois WHISTLE BLOWER Reward and Protection Act, 740 ILCS § 175/3, provides in pertinent part: SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 75 CASENo . . CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page ) 86 of 139 Page ID #:456 1 2 3 4 5 6 7 (a) Any person who: ... (7) knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid or decrease an obligation to pay or transmit money or property to the State; ... is liable to the State for a civil penalty of not less than $5,500 and not more than $11,000, plus 3 times the amount of damages which the State sustains because of the act of that person. A person violating this subsection (a) shall also be liable to the State for the costs of a civil action brought to recover any such penalty or damages 8 9 10 11 12 13 14 15 16 (b) Knowing and knowingly defined. As used in this Section, the terms "knowing" and "knowingly" mean that a person, with respect to information: (1) has actual knowledge of the information; (2) acts in deliberate ignorance of the truth or falsity of the information; or (3) acts in reckless disregard of the truth or falsity of the information, and no proof of specific intent to defraud is required. 365. Defendants, and each of them knowingly made, or used or caused to be made or used, false records or statements, submitted or caused the submission of 17 18 false claims, and also did these things to conceal, avoid, or decrease an obligation to 19 pay or transmit money or property to the State of Illinois Medicaid Program. Said 20 21 22 23 program is jointly funded by the United States and the State of Illinois. By engaging in the conduct outlined above, Defendants, and each of them caused significant financial loss to the United States and the State of Illinois. 24 25 26 366. Additionally, Defendants, and each of them gave or caused to be given 'kickbacks' to physicians and other health care professionals to induce them to 27 28 prescribe Subsys in violation of state law, including Ill. Stat., Ch. 305, § 5/8A-3. SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 76 CASENo . . CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW) Document 33 Filed 06/13/16 Page 87 of 139 Page ID #:457 1 367. WHEREFORE, the Relator respectfully requests this Court to enter 2 judgment for the State of Illinois and against Defendants, and each of them for an 3 4 5 amount of three times the amount of damages sustained by the State of Illinois and a civil penalty of $11,000 for each act of submitting false statements by Defendants, 6 and each of them. 7 8 COUNT XV 9 VIOLATION OF THE INDIANA FALSE CLAIMS ACT 10 (INDIANA CODE 5-11-5.5) 11 12 13 368. The allegations of paragraphs 1 through 266 are realleged as if fully set forth herein. 14 15 16 369. Pursuant to the Indiana False Claims Act (IC 5-11-5.S(b)): (b) A person who knowingly or intentionally: 17 18 ( 1) presents a false claim to the state for payment or approval; 19 20 (2) makes or uses a false record or statement to obtain payment or approval of a false claim from the state; 21 22 23 24 25 26 **** is, except as provided in subsection©, liable to the state for a civil penalty of at least five thousand dollars ($5,000) and for up to three (3) times the amount of damages sustained by the state. In addition, a person who violates this section is liable to the state for the costs of a civil action brought to recover a penalty or damages. 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 77 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW) Document 33 Filed 06/13/16 Page 88 of 139 Page ID #:458 1 370. Defendants, and each of them knowingly presented, or caused to 2 presented, false claims and/or false records or statements regarding Subsys, to get 3 4 5 6 7 8 9 false claims paid. 371. Additionally, Defendants, and each of them, gave or caused to be given 'kickbacks' to physicians and other health professionals to induce them to prescribe Subsys, in violation of state law, including LC. 12-15-24-2. 372. Defendants, and each of them knowingly presented or caused to be 10 11 presented false claims for payment to the Indiana Medicaid Program creating liability 12 for a false claims action pursuant to LC. 5-11-5.5. 13 14 373. As a result of conduct set forth in this count, the State of Indiana paid 15 the improper Medicaid claims and has suffered actual damages. 16 374. Pursuant to LC. 5-l l-5.5(b ), a civil penalty of at least five thousand 17 18 dollars ($5,000) and up to three (3) times the amount of damages sustained by the 19 state, and for the costs of this civil action. 20 21 375. WHEREFORE, Relator respectfully requests that judgment be entered 22 in favor of the State of Indiana against Defendants, and each of them, as follows: 23 376. For a civil penalty of at least five thousand dollars ($5,000) and for up to 24 25 26 three (3) times the amount of damages sustained by the state, and for the costs of this civil action. 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINTUNDER SEAL 78 CASE No .. CV 13-5861 GHK (AJWX) - ------------ - ~-I-------- Case 2:13-cv-05861-JLS-AJW ) Document 33 Filed 06/13/16 Page 89 of 139 Page ID #:459 ) 1 COUNT XVI 2 VIOLATION OF THE LOUISIANA MEDICAL ASSISTANCE PROGRAMS 3 INTEGRITY LAW 4 (LA.REV. STATE. ANN§ 46:439.1 et seq.) 5 6 7 377. The allegations of paragraphs 1 through 266 are realleged as though fully set forth herein. 8 9 378. Pursuant to §437.2 of the Louisiana Medical Assistance Programs 1O Integrity Law: 11 12 13 14 "This Part is enacted to combat and prevent fraud and abuse committed by some health care providers participating in the medical assistance programs and by other persons and to negate the adverse effects such activities have on fiscal and programmatic integrity." 15 16 379. Section 438.3 of the Louisiana Medical Assistance Programs Integrity 17 18 19 20 21 22 23 24 25 26 Law provides in pertinent part: A. No person shall knowingly present or cause to be presented a false or fraudulent claim. B. No person shall knowingly engage in misrepresentation to obtain, or attempt to obtain, payment from medical assistance programs funds. C. No person shall conspire to defraud, or attempt to defraud, the medical assistance programs through misrepresentation or by obtaining, or attempting to obtain, payment for a false or fraudulent claim. 27 28 **** SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 79 CASENo . . CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page ) 90 of 139 Page ID #:460 ) 1 2 3 4 5 6 This Law defines a "false or fraudulent claim" to be: " ... a claim which the health care provider or his billing agent submits knowing the claim to be false, fictitious, untrue, or misleading in regard to any material information. "False or fraudulent claim" shall include a claim which is part of a pattern of incorrect submissions in regard to material information or which is otherwise part of a pattern in violation of applicable federal or state law or rule. (Section 437.3(8)) 7 8 9 380. Defendants, and each of them knowingly presented, or caused to presented, false claims for payment and/or false records or statements regarding 10 11 Subsys in order to get claims paid or in order to conceal, avoid, or decrease an 12 obligation to pay or transmit money to the State of Louisiana Medicaid Program. 13 14 15 16 381. Additionally, Defendants, and each of them gave or caused to be given 'kickbacks' to physicians and other health professionals to induce them to prescribe Subsys, in violation of state law, including La. Rev. Stat. § 14:70.5. 17 18 382. Defendants, and each of them knowingly presented or caused to be 19 presented false claims for payment to the Louisiana Medicaid Program creating 20 21 22 23 liability for a false claims action pursuant to the Louisiana Medical Assistance Programs Integrity Law. 383. As a result of the conduct of Defendants, and each of them, as set forth 24 25 26 in this count, the State of Louisiana paid the improper Medicaid claims and has suffered actual damages. 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 80 CASENo .. CV 13-5861 GHK (AJWX) - --- ------------------- - ----11 Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 91 of 139 Page ID #:461 ) 1 384. Pursuant to Section 438.6 of the LouisianaMedical Assistance Programs 2 Integrity Law: 3 4 5 6 7 8 9 10 11 12 ( 1) Actual damages incurred as a result of a violation of the provisions of this Part shall be recovered only once by the medical assistance programs and shall not be waived by the court. (2) Except as provided by Paragraph (3) of this Subsection, actual damages shall equal the difference between what the medical assistance programs paid, or would have paid, and the amount that should have been paid had not a violation of this Part occurred plus interest at the maximum rate of legal interest provided by Civil Code Article 2924 from the date the damage occurred to the date of repayment. 13 14 15 16 17 18 19 20 21 (3) If the violator is a managed care health care provider or a health care provider under a voucher program, actual damages shall be determinedin accordance with the violator's provider agreement. B. Civil fine. (1) Any person who is found to have violated R.S. 46:438.2 shall be subject to a civil fine in an amount not to exceed ten thousand dollars per violation, or an amount equal to three times the value of the illegal remuneration, whichever is greater. 22 23 24 25 26 (2) Except as limited by this Section, any person who is found to have violated R.S. 46:438.3 shall be subject to a civil fine in an amount not to exceed three times the amount of actual damages sustained by the medical assistance programs as a result of the violation. 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 81 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page ) 92 of 139 Page ID #:462 J 1 2 3 4 5 C. Civil monetary penalty. (1) In addition to the actual damages provided in Subsection A of this Section and the civil fine imposed pursuant to Subsection B of this Section, one or more of the following civil monetary penalties may be imposed on the violator: 6 7 8 9 (a) Up to ten thousand dollars for each false or fraudulent claim, misrepresentation, illegal remuneration, or other prohibited act as contained in R.S. 46:438.2, R.S. 46:438.3, or R.S. 46:438.4. 10 11 12 13 14 (b) Payment of interest on the amount of the civil fine imposed pursuant to Subsection B of this Section at the maximum rate of legal interest provided by Civil Code Article 2924 from the date the damage occurred to the date of repayment. 15 16 17 18 19 (2) Prior to the imposition of a civil monetary penalty, the court shall consider if there are extenuating circumstances as provided in R.S. 46:438.7. D. Costs, expenses, fees, and attorney fees. 20 21 22 23 24 25 26 (1) Any person who is found to have violated this Subpart shall be liable for all costs, expenses, and fees related to investigations and proceedings associated with the violation, including attorney fees. (2) All awards of costs, expenses, fees, and attorney fees are subject to review by the court using a reasonable, necessary, and proper standard of review. 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAJNT UNDER SEAL 82 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 93 of 139 Page ID #:463 1 E. 2 (1) If recovery is due from a health care provider 3 under the provisions of Subsections A and B of this Section, such recovery shall constitute civil liquidated damages for breach of the conditions and requirements of participation in the medical assistance programs which are and shall be construed by the courts to be remedial, but not retroactive, in nature. 4 5 6 7 8 (2) Any award of civil liquidated damages, costs, 9 expenses, and attorneys' fees shall be in addition to criminal penalties and to the civil monetarypenalty provided in Subsection C of this Section. 10 11 12 13 14 385. WHEREFORE, Relator respectfully requests that judgment be entered in favor of the State of Louisiana and against Defendants,and each of them, as 15 16 17 18 19 follows: 386. Actual damages plus interest at the maximum rate oflegal interest provided by Civil Code Article 2924 from the date the damage occurred to the date of 20 repayment; a civil fine in an amount not to exceed ten thousand dollars per violation, 21 or an amount equal to three times the value of the illegal remuneration, whichever is 22 23 24 greater; and/or for violation of R.S. 46:438.3 a civil fine in an amount not to exceed three times the amount of actual damages sustained by the medical assistance 25 26 27 28 programs as a result of the violation; and civil money penalties up to ten thousand dollars for each false or fraudulent claim, misrepresentation,illegal remuneration,or other prohibited act as contained in R.S. 46:438.2, R.S. 46:438.3, or R.S. 46:438.4, SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 83 CASENO. . CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 94 of 139 Page ID #:464 ) ) 1 and payment of interest on the amount of the civil fine imposed pursuant to 2 Subsection B of the above-referenced Louisiana law at the maxim.um.rate oflegal 3 4 5 6 interest provided by Civil Code Article 2924 from the date the dam.age occurred to the date of repayment; plus all costs, expenses, and fees related to investigations and proceedings associated with the violation, including attorney fees; and such other and 7 8 further relief as this Honorable Court deems fit and proper. 9 COUNT XVII 10 FOR VIOLATION OF THE MASSACHUSETTS FALSE CLAIMS ACT 11 (M.G.L. c. 12 § SA, et seq.) 12 13 387. The allegations of paragraphs 1 through 266 are realleged as if fully 14 15 16 set forth herein. 388. Defendants, and each of them. knowingly made, or used or caused to be 17 18 made or used, false claims for payment and/or false records or statements regarding 19 Subsys in order to get false claims paid and/or to decrease an obligation to pay or 20 transmit money or property to the Massachusetts Medicaid Program.. Said program. is 21 22 jointly funded by the United States and the Commonwealth of Massachusetts. By 23 engaging in the conduct outlined above, Defendants, and each of them. caused 24 25 26 significant financial loss to the United States and the Commonwealth of Massachusetts. 27 28 SECOND AMENDED FALSE CLAIM ACT QUITAMCOMPLAINT , 84 UNDER SEAL CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 95 of 139 Page ID #:465 1 389. Additionally, Defendants, and each of them gave or caused to be given 2 'kickbacks' to physicians and other licensed health professionals to induce them to 3 4 5 6 prescribe Subsys in violation of state law, including Mass. Gen. Law 118E § 41. 390. WHEREFORE, the Relator respectfully requests this Court to enter judgment forthe Commonwealth of Massachusetts and against Defendants, and each 7 8 of them for an amount of three times the amount of damages sustained by the 9 Commonwealth of Massachusetts and a civil penalty of $10,000 for each act of 10 11 submitting false statements by Defendants, and each of them. 12 COUNT XVIII 13 VIOLATION OF THE MICHIGAN MEDICAID FALSE CLAIMS ACT 14 15 391. The allegations of paragraphs 1 through 266 are realleged as though 16 17 18 19 fully set forth herein 392. Section 400.603 of the State of Michigan's Medicaid False Claims Act provides in part: 20 21 22 23 24 25 26 27 28 (1) A person shall not knowingly make or cause to be made a false statement or false representation of a material fact in an application for medicaid benefits. (2) A person shall not knowingly make or cause to be made a false statement or false representation of a material fact for use in determining rights to a medicaid benefit. (3) A person, who having knowledge of the occurrence of an event affecting his initial or continued right to receive a medicaid benefit or the initial or continued right of any SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL CASE No .. CV 13-5861 GHK(AJWX) 85 Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 96 of 139 Page ID #:466 or is other person on whose behalf he has applied for lose that receiving a benefit, shall not conceal or fail to disc person or event with intent to obtain a benefit to which the greater than any other person is not entitled or in an amount tled. that to which the person or any other person is enti 1 2 3 4 *** 5 M.C.L. §400.602(f) provides: presented, or caused to 393. Defendants, and each of them knowingly 6 7 or false records or statements regarding 8 presented, false claims for payment and/ 9 10 11 12 13 order to conceal, avoid, or decrease Subsys in order to get false claims paid and/or in e of Michigan Medicaid Program. an obligation to pay or transmit money to the Stat gave or caused to be given 394. Additionally, Defendants, and each of them essionals to induce them to 'kickbacks' to physicians and other health care prof 14 law, including § 400.604. 15 prescribe Subsys, in violation of state 16 presented or caused to be 395. Defendants, and each of them knowingly 17 icaid Program creating d false claims for payment to the Michigan Med ente pres 18 e Claims Act. 19 liability for a false claims action pursuant to Michigan's Medicaid Fals 20 count, the State of Michigan 396. As a result of the conduct set forth in this 21 has suffered actual damages. 22 paid the improper Medicaid claims and 23 24 25 26 27 28 397. Pursuant to M.C.L. §400.612(1): is not A person who receives a benefit which the person a fraudulent entitled to receive by reason of fraud or making shall statement or knowingly concealing a material fact the full forfeit and pay to the state a civil penalty equal to suffered amount received plus triple the amount of damages on. by the state as a result of the conduct by the pers SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINTUNDER SEAL CASENo .. CV 13-5861 GHK (AJWX) 86 Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 97 of 139 Page ID #:467 1 2 3 398. M.C.L. §4OO.61Oaalso provides for an award against Defendants for reasonable attorneys' fees, costs and expenses. 4 5 399. WHEREFORE, Relator respectfully requests that judgment be entered 6 in favor of the State of Michigan and against Defendants as follows: 7 400. A civil penalty equal to the full amount received plus triple the amount 8 9 of damages suffered by the state, plus attorneys' fees, costs and expenses, and any 10 other and further relief that this Honorable Court deems fit and proper. 11 12 COUNT XIX 13 VIOLATION OF THE MINNESOTA FALSE CLAIMS ACT 14 Minn. Stats. 15C.0l - .13 15 16 401. The allegations of paragraphs 1 through 266 are realleged as though 17 fully set forth herein. 18 19 20 21 22 23 24 25 26 27 402. Section 15C.O2 of the Minnesota False Claims Act provides in part: (a) A person who commits any act described in clauses (1) to (7) is liable to the state ... for a civil penalty of not less than $5,500 and not more than $11,000 per false or fraudulent claim, plus three times the amount of damages that the state ... sustains because of the act of that person,,, (1) knowingly presents or causes to be presented, a false or fraudulent claim for payment or approval; (2) knowingly makes or uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim; 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 87 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW ) Document 33 Filed 06/13/16 Page 98 of 139 Page ID #:468 , ) (3) knowingly conspires to commit a violation of clause (1), (2), (4), (5), (6), or (7); 1 2 3 4 (7) knowingly makes or uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the state ... or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay money or transmit property to the state 5 6 7 " 8 9 10 403. Defendants, and each of them knowingly presented, or caused to 11 12 presented, false or fraudulent claims for payment or approval; knowingly made or 13 used or caused the submission or use of false records or statements regarding Subsys 14 15 16 17 material to these claims; and/or false records or statements in order to conceal, avoid, or decrease an obligation to pay or transmit money to the State of Minnesota. Defendants, and each of them, conspired among themselves and with others to do 18 19 these things. 20 404. Additionally, Defendants, and each of them gave or caused to be given 21 22 23 24 'kickbacks' to physicians and other health care professionals to induce them to prescribe Subsys, in violation of state law, including Minn.Stat. 69J.23 et. seq. 405. Defendants, and each of them knowingly presented or caused to be 25 26 27 presented false claims for payment to the Minnesota Medicaid Program creating liability for a false claims action pursuant to Minnesota's False Claims Act. 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 88 CASE No .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW ) Document 33 Filed 06/13/16 Page 99 of 139 Page ID #:469 1 2 406. As a result of the conduct set forth in this count, the State of Minnesota paid the improper Medicaid claims and has otherwise suffered actual damages. 3 4 407. § 15C.12 also provides for an award against Defendants for reasonable 5 attorneys' fees, costs and expenses. 6 408. WHEREFORE, Relator respectfully requests that judgment be entered 7 8 in favor of the State of Minnesota and against Defendants and each of them as 9 follows: 10 11 409. A civil penalty equal to the full amount received plus triple the amount 12 of damages suffered by the state, plus attorneys' fees, costs and expenses, and any 13 14 other and further relief that this Honorable Court deems fit and proper. 15 COUNT XX 16 VIOLATION OF THE MONTANA FALSE CLAIMS ACT 17 (MONT. CODE, CH. 465, HB 146 (2005)) 18 19 20 410. The allegations of paragraphs 1 through 266 are realleged as though fully set forth herein 21 22 23 411. Section 3 of the Montana False Claims Act (Mont. Code, CH. 465, HB 146 (2005)) provides in pertinent part as follows: 24 25 26 27 Section 3. False claims -- procedures -- penalties. (1) A person causing damages in excess of $500 to a governmental entity is liable, as provided in [sections 10 and 11], for any of the following acts: 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL CASENo .. CV 13-5861 GHK (AJWX) 89 Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 100 of 139 Page ID ) #:470 1 2 (a) knowingly presenting or causing to be presented to an officer or employee of the governmental entity a false claim for payment or approval; 3 4 5 (b) knowingly making, using, or causing to be made or used a false record or statement to get a false claim paid or approved by the governmental entity; 6 7 (c) conspiring to defraud the governmental entity by getting a false claim allowed or paid by the governmental entity; 8 9 10 11 12 13 14 15 16 17 18 **** (g) knowingly making, using, or causing to be made or used a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the governmental entity or its contractors; or (h) as a beneficiary of an inadvertent submission of a false claim to the governmental entity, subsequently discovering the falsity of the claim and failing to disclose the false claim to the governmental entity within a reasonable time after discovery of the false claim. 412. Defendants, and each of them, knowingly presented, or caused to presented, false claims for payment and/or false records or statements regarding 19 20 21 Subsys in orcler to get~false claims paicl, ancl1orto conceal, avoid, or decrease an obligation to pay or transmit money to the State of Montana Medicaid Program. 22 23 24 413. Additionally, Defendants, and each of them gave or caused to be given 'kickbacks' to physicians and other health professionals to induce them to prescribe 25 26 27 28 Subsys, in violation of state law, including Mon. 45-6-313. 414. As a result of the conduct set forth in this count, the State of Montana paid the improper Medicaid claims and has suffered actual damages. SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 90 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 101 of 139 Page ID ) #:471 1 2 3 4 5 6 7 415. Section 3 of the Montana False Claims Act provides in pertinent part: (2) In a civil action brought under [section 5 or 6], a court shall assess not less than two times and not more than three times the amount of damages that a governmental entity sustains because of the person's act, along with costs and attorney fees, and may impose a civil penalty ofup to $10,000 for each act. 416. Section 11 of the Montana False Claims Act also provides for an award 8 9 10 11 of attorneys's fees and costs against Defendants. 417. WHEREFORE, Relator respectfully requests that judgment be entered in favor of the State of Montana and against Defendants and each of them as follows: 12 13 14 418. Three times the amount of damages that a governmental entity sustains because of the Defendants' s acts, along with costs and attorney fees, and a civil 15 16 419. penalty of up to $10,000 for each act, and any other and further relief 17 that this Honorable Court deems fit and proper. 18 19 COUNTXXI 20 VIOLATION OF THE NEVADA FALSE CLAIMS ACT 21 (NRS 357.010 et seq.) 22 23 24 25 420. The allegations of paragraphs 1 through 266, inclusive, are realleged as though fully set forth herein. 421. Defendants, and each of them knowingly submitted or caused the 26 27 submission of false claims for payment and/or made, or used or caused to be made or 28 used, false records or statements regarding Subsys in order to get false claims paid SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 91 CASENo . . CV 13-5861 GHK (AJWX) -- -------- Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 102 of 139 Page ID #:472 1 and/or to conceal, avoid, or decrease an obligation to pay or transmit money to the 2 State of Nevada Medicaid Program. 3 422. Additionally, Defendants, and each of them gave or caused to be given 4 5 'kickbacks' to physicians and other health professionals to induce them to prescribe 6 Subsys, in violation of state law, including Nev. Rev. Stats. § 422.560. 7 423. WHEREFORE, Relator respectfully requests this Court to enter 8 9 judgment for the State of Nevada and against Defendants and each of them, and to 10 11 award damages to the State of Nevada as authorized by the provisions ofNRS 12 357.040. 13 14 COUNTXXII 15 CLAIMS OF THE STATE OF NEW HAMPSHIRE 16 VIOLATION OF THE NEW HAMPSHIRE FALSE CLAIMS ACT 17 (NEW HAMPSHIRE CODE §167:61-b) 18 424. The allegations of paragraphs 1 through 266are realleged as though fully 19 20 set forth herein 21 425. The New Hampshire False Claims Act (167:61-b) provides in pertinent 22 23 part: 24 25 26 I. Any person shall be liable to the state for a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages that the state sustains because of the act of that person, who: 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 92 CASENo . . CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 103 of 139 Page ID #:473 (a) Knowingly presents, or causes to be presented, to an officer or employee of the department, a false or fraudulent claim for payment or approval. 1 2 3 (b) Knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the department. 4 5 6 (c) Conspires to defraud the department by getting a false or fraudulent claim allowed or paid. 7 8 (f) Is a beneficiary of an inadvertent submission of a false claim to the department, who subsequently discovers the falsity of the claim, and fails to disclose the false claim to the department within a reasonable time after discovery of the false claim. 9 10 11 12 426. Defendants, and each of them knowingly presented, or caused to 13 14 -presented, false claims for payment and/or false records or statements regarding 15 16 Subsys in order to get false claims paid and/or to conceal, avoid, or decrease an 17 obligation to pay or transmit money to the State of New Hampshire Medicaid 18 Program. 19 427. Additionally, Defendants, and each of them gave or caused to be given 20 21 'kickbacks' to physicians and other health care professionals to induce them to 22 23 prescribe Subsys, in violation of state law, including N.H. Rev. Stat.§§ 167:61-a, I(I) 24 & (j). 25 26 428. As a result of the conduct set forth in this count, the State of New 27 Hampshire paid the improper Medicaid claims and has suffered actual damages in 28 excess of $5,000.00. SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 93 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 104 of 139 Page ID ) #:474 429. Section 167:61-e of the New Hampshire False Claims Act also provides 1 2 for an award of attorneys fees and costs against Defendants. 3 430. WHEREFORE, Relator respectfully requests that judgment be entered 4 5 6 in favor of the State of New Hampshire and against Defendants, and each of them, as follows: 7 431. A civil penalty of $10,000, plus 3 times the amount of damages that the 8 9 state of New Hampshire has sustained because of the acts of Defendants, plus 10 11 attorneys' fees and costs, and any other and further relief that this Honorable Court 12 deems fit and proper. 13 14 COUNTXXIII 15 VIOLATION OF THE NEW JERSEY FALSE CLAIMS ACT 16 (2A:32C et. seq.) 17 432. The allegations of paragraphs 1 through 266are realleged as though fully 18 19 set forth herein 20 433. §2A:32C-3 of the New Jersey False Claims Act provides in pertinent 21 22 part: 23 24 25 26 27 28 Any person who commits any of the following acts shall be jointly and severally liable to the State for a civil penalty of not less than and not more than the civil penalty allowed under the federal False Claims Act (31 U.S.C. s.3729 et 37 seq.), as may be adjusted in accordance with the inflation adjustment procedures prescribed in the Federal Civil Penalties Inflation Adjustment Act of 1990, Pub.L.101-410, SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 94 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW 33 Filed 06/13/16 Page 105 of 139 Page ID ) Document#:475 1 2 for each false claim, plus three times the amount of damages which the State sustains because of the act of that person: 3 a. Knowingly presents or causes to be presented to an employee, officer or agent of the State, or to any contractor, grantee, or other recipient of State funds, a false claim for payment or approval; 4 5 6 7 8 b. Knowingly makes, 1 uses, or causes to be made or used a false record or statement to get a false claim paid or approved by the State; 9 10 c. Conspires to defraud the State by getting a false claim allowed or paid by the State; 11 12 13 14 g. Knowingly makes, uses, or causes to be made or used a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the State. 15 16 17 18 19 434. Defendants, and each of them knowingly presented, or caused to presented, false or fraudulent claims for payment and/or false records or statements 20 21 22 regarding Subsys in order to get false or fraudulent claims paid; and/or to conceal, avoid, or decrease an obligation to pay or transmit money to the State of New Jersey 23 24 25 Medicaid Program. 435. Additionally, Defendants, and each of them gave or caused to be give 26 27 28 'kickbacks' to physicians and other health professionals to induce them to prescribe Subsys, in violation of state law, including N.J. Stat. §§ 30:4D-l 7©. SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 95 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 106 of 139 Page ID ) ) #:476 1 2 436. Defendants, and each of them knowingly presented or caused to be presented false claims for payment to the New Jersey Medicaid Program creating 3 4 5 6 liability for a false claims action pursuant to New Jersey's False Claims Act. 437. As a result of the conduct set forth in this count, the State ofNew Jersey paid the improper Medicaid claims and has suffered actual damages. 7 8 9 438. Pursuant to Section 8 of the New Jersey False Claims Act, the court may also award reasonable attorneys' fees, costs and expenses against the Defendants. 10 11 439. WHEREFORE, Relator respectfully requests that judgment be entered 12 in favor of the State of New Jersey and against Defendants, and each of them, as 13 14 15 16 follows: 440. A civil penalty of not less than and not more than the civil penalty allowed under the federal False Claims Act (31 U.S.C. s.3729 et 37 seq.), as may be 17 18 adjusted in accordance with the inflation adjustment procedures prescribed in the 19 Federal Civil Penalties Inflation Adjustment Act of 1990, Pub.L.101-410, for each 20 21 22 false claim, plus three times the amount of damages, plus attorneys fees, costs and expenses, and any and all other relief that this court deems fit and proper. 23 24 25 26 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 96 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 107 of 139 Page ID #:477 1 COUNTXXIV 2 VIOLATION OF THE NEW MEXICO MEDICAID FALSE CLAIMS ACT 3 and the NEW MEXICO FRAUD AGAINST TAXPAYERS ACT" 4 5 6 441. The allegations of paragraphs 1 through 266are realleged as though fully set forth herein. 7 8 9 442. §27-14-4 of The New Mexico Fraud Against Taxpayers Act \provides in pertinent part that: 10 11 12 13 14 15 16 17 18 19 20 21 "[A] person commits an unlawful act and shall be liable to the state for three times the amount of damages that the state sustains as a result of the act if the person: (A) presents or causes to be presented to the state a claim for payment under the medicaid program knowing that such claim is false or fraudulent; ... (C) makes, uses, or causes to be made or used a record or statement to obtain a false or fraudulent claim under the medicaid program paid for or approved by the state knowing such record or statement is false; (D) conspires to defraud the state by getting a claim allowed or paid under the medicaid program knowing that such claim is false or fraudulent; (E) makes, uses, or causes to be made or used a record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the state, relative to the medicaid program, knowing that such record or statement is false ... " 22 23 443. Defendants, and each of them knowingly presented, or caused to 24 25 26 27 presented, false or fraudulent claims for payment and/or false records or statements to get claims paid; and or to conceal, avoid, or decrease an obligation to pay or transmit money to the State of New Mexico Medicaid Program. 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 97 CASENo . . CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 108 of 139 Page ID ) #:478 444. Additionally, Defendants, and each of them gave or caused to be given 1 2 'kickbacks' to physicians and other health care professionals to induce them to 3 4 prescribe Subsys, in violation of state law, including N.M. Stat. § 30-44-1-8. 5 6 7 8 9 445. Defendants, and each of them knowingly presented or caused to be presented false claims for payment to the New Mexico Medicaid Program creating liability for a false claims action pursuant to New Mexico's Fraud Against Taxpayers Act. 10 11 446. As a result the conduct set forth in this count, the State of New Mexico 12 paid the improper Medicaid claims and has suffered actual damages. 13 14 447. §44-9-3 of the New Mexico Fraud Against Taxpayers Act provides in 15 pertinent part that: 16 17 C. A person who violates Subsection A of this section shall be liable for: 18 19 (1) three times the amount of damages sustained by a state agency because of the violation; 20 21 22 23 24 (2) a civil penalty of not less than five thousand dollars ($5,000) and not more than ten thousand dollars ($10,000) for each violation; (3) the costs of a civil action brought to recover damages or penalties; and 25 26 (4) reasonable attorney fees, including fees for state agency counsel. 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 98 CASE No .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 109 of 139 Page ID ) #:479 1 448. WHEREFORE, Relator respectfully requests that judgment be entered 2 in favor of the State of New Mexico and against Defendants, and each of them, as 3 4 5 follows: 449. Three times the amount of damages sustained by the State of New 6 Mexico's Medicaid Program; a civil penalty of $10,000.00 for each violation; the 7 8 9 costs of this Action; reasonable attorneys fees; and all other relief that this Honorable Court deems fit and proper. 10 11 12 13 COUNTXXV VIOLATION OF THE NEW YORK FALSE CLAIMS ACT (NEW YORK CODE §39 - ARTICLE XIII §§ 187 et seq.) 14 15 450. The allegations of paragraphs 1 through 266 are realleged as though 16 17 18 19 fully set forth herein. 451. The New York False Claims Act (NYC §39 -Article XIII §§187 et seq.) provides in pertinent part as follows: 20 21 22 23 24 25 26 §189. Liability for certain acts. 1. Subject to the provisions of subdivision two of this section, any person who: (a) knowingly presents, or causes to be presented, to any employee, officer or agent of the state or a local government, a false or fraudulent claim for payment or approval; 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 99 CASENo .. CV 13-5861 GHK (AJWX) \ Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 110 of 139 Page ID ) ) #:480 (b) knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the state or a local government; 1 2 3 4 (c) conspires to defraud the state or a local government by getting a false or fraudulent claim allowed or paid; 5 6 7 8 (g) knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the state or a local government; shall be liable: (I) to the state for a civil penalty of not less than six thousand dollars and not more than twelve thousand dollars, plus three times the amount of damages which the state sustains because of the act of that person; and (ii) to any local government for three times the amount of damages sustained by such local government because of the act of that person. 9 10 11 12 13 14 15 16 17 452. Pursuant Section 188(3) of the New York False Claims Act, proof of 18 specific intent to defraud is not required. 19 20 21 453. Defendants, and each of them knowingly presented, or caused to presented, false or fraudulent claims for payment or approval; false records or 22 23 statements to get a false or fraudulent claim paid; and/or to conceal, avoid, or 24 decrease an obligation to pay or transmit money to the State of New York Medicaid 25 Program. 26 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 100 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW 33 Filed 06/13/16 Page 111 of 139 Page ID ) ) Document#:481 1 454. Additionally, Defendants, and each of them gave or caused to be given 2 'kickbacks' to physicians and other health professionals to induce them to prescribe 3 4 5 6 Subsys, in violation of state law, including N.Y. Soc. Serv. Laws 366-d, 366-f. 455. As a result of the conduct set forth in this count, the State ofNew York paid the improper Medicaid claims and has suffered actual damages. 7 8 9 456. Pursuant to §190(7) of the New York False Claims Act, the court may award reasonable attorneys' fees, reasonable expenses, and costs, against Defendants, 10 11 and each of them .. 12 457. WHEREFORE, Relator respectfully requests that judgment be entered 13 14 in favor of the State ofNew York and against Defendants, and each of them, as 15 follows: 16 458. A civil penalty of twelve thousand dollars, plus three times the amount 17 18 of damages which the state sustained because of the acts of Defendants; plus costs, 19 reasonable attorneys' fees, reasonable expenses, and any and all further relief that this 20 21 Honorable Court deems fit and proper. 22 COUNTXXVI 23 VIOLATION OF THE NORTH CAROLINA FALSE CLAIMS ACT 24 (NORTH CAROLINA STATUTES- §§1-605 -18) 25 26 27 459. The allegations of paragraphs 1 through 266 are realleged as though fully set forth herein. 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL CASENo . . CV 13-5861 GHK (AJWX) 101 Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 -) Page 112 of 139 Page ID #:482 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 460. § 1-607 provides in pertinent part as follows: (a) Any person who commits any of the following acts shall be liable to the State for three times the amount of damages that the State sustains because of the act of that person. A person who commits any of the following acts also shall be liable to the State for the costs of a civil action brought to recover any of those penalties or damages and shall be liable to the State for a civil penalty of not less than five thousand, five hundred dollars ($5,500) and not more than eleven thousand dollars ($11,000) for each violation: (1) Knowingly presents or causes to be presented, a false or fraudulent claim for payment or approval; (2) Knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim; (3) knowingly conspires to commit a violation of clause (I), (2), (4), (5), (6), or (7) of this section; 16 17 18 19 20 21 (7) Knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the State or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay money or transmit property to the state " 22 23 461. Defendants, and each of them knowingly presented, or caused to 24 presented, false or fraudulent claims for payment or approval; knowingly made or 25 26 used or caused the submission or use of false records or statements regarding Subsys 27 material to these claims; and/or false records or statements in order to conceal, avoid, 28 or decrease an obligation to pay or transmit money to the State of Minnesota. SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 102 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 113 of 139 Page ID #:483 1 Defendants, and each of them, conspired among themselves and with others to do 2 these things. 3 462. Additionally, Defendants, and each of them gave or caused to be given 4 5 'kickbacks' to physicians and other health care professionals to induce them to 6 prescribe Subsys, in violation of state law, including North Carolina Stat. 69J.23 et. 7 8 9 seq. Defendants, and each of them knowingly presented or caused to be presented false claims for payment to the North Carolina Medicaid Program creating liability 10 11 12 for a false claims action pursuant to North Carolina's False Claims Act. 463. As a result of the conduct set forth in this count, the State of North 13 14 Carolina paid the improper Medicaid claims and has otherwise suffered actual 15 damages. 16 464. §§1-610 (d) and (e) also provide for an award against Defendants for 17 18 reasonable attorneys' fees, costs and expenses. 19 20 21 COUNTXXVII VIOLATION OF THE OKLAHOMA FALSE CLAIMS ACT (OKLAHOMA STATUTES -TITLE 63, SECTION 5053) 22 23 465. The allegations of paragraphs 1 through 266 are realleged as though 24 25 26 fully set forth herein. 466. Section 5053.l(B) provides in pertinent part as follows: 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 103 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 114 of 139 Page ID l #:484 1 2 3 4 5 6 B. Any person who: 1. Knowingly presents, or causes to be presented, to an officer or employee of the State of Oklahoma, a false or fraudulent claim for payment or approval; 2. Knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the state; 7 8 9 3. Conspires to defraud the state by getting a false or fraudulent claim allowed or paid; 10 11 12 13 14 15 16 17 18 7. Knowingly makes, uses, or causes to be made or used, a false record to conceal, avoid, or decrease an obligation to pay or transmit money or property to the state, is liable to the State of Oklahoma for a civil penalty of not less than Five Thousand Dollars ($5,000.00) and not more than Ten Thousand ($10,000.00), unless a penalty is imposed for the act of that person in violation of this subsection under the Federal False Claims Act for the same or a prior action, plus three time the amount of damages which the state sustains because of the act of that person. 19 20 21 22 23 467. Defendants, and each of them knowingly presented or caused to be presented false claims for payment to the Oklahoma Medicaid Program creating liability for a false claims action pursuant to Oklahoma's False Claims Act. 24 25 26 468. Defendants, and each of them knowingly presented, or caused to presented, false records or statements regarding Subsys in order to get false or 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 104 CASENo .. CV 13-5861 GHK (AJWX) - - -- -- -------------- Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 115 of 139 Page ID #:485 1 fraudulent claims paid; and/or to conceal, avoid, or decrease an obligation to pay or 2 transmit money to the State of Oklahoma Medicaid Program. 3 4 5 469. As a result of the conduct set forth in this count, the State of Oklahoma paid the improper Medicaid claims and has suffered actual damages. 6 7 8 9 470. Pursuant to Section 5053.4 of the Oklahoma False Claims Act, an award of reasonable attorneys' fees, costs and expenses is also to be awarded against Defendants. 10 11 12 4 71. WHEREFORE, Relator respectfully requests that judgment be entered against Defendants, and each of them, and in favor of the State of Oklahoma as 13 14 15 16 follows: 472. A civil penalty of Ten Thousand ($10,000.00), (unless a penalty is imposed for the act of that Defendants in violation of this subsection under the 17 18 Federal False Claims Act for the same or a prior action), plus three time the amount 19 of damages which the State of Oklahoma sustained because of the act of that person; 20 21 22 plus costs, reasonable attorneys' fees, expenses, and any and all further relief that this Honorable Court deems fit and proper. 23 24 25 26 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 105 CASENo . . CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 116 of 139 Page ID #:486 1 COUNT XXVIII 2 VIOLATION OF THE STATE FALSE CLAIMS ACT 3 (RHODE ISLAND CODE - CHAPTER 9-1.1) 4 5 6 4 73. The allegations of paragraphs 1 through 266are realleged as though fully set forth herein 7 8 9 474. Pursuant to Chapter 9-1.1, of the State False Claims Act of the State of Rhode Island: 10 (a) Any person who: 11 12 13 (1) Knowingly presents, or causes to be presented, to an officer or employee of the state or a member of the guard a false or fraudulent claim for payment or approval; 14 15 16 (2) Knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the state; 17 18 (3) Conspires to defraud the state by getting a false or fraudulent claim allowed or paid; 19 20 21 22 23 24 25 26 27 (7) Knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid or decrease an obligation to pay or transmit money or property to the state, is liable to the state for a civil penalty of not less than five thousand dollars ($5,000) and not more than ten thousand dollars ($10,000), plus three (3) times the amount of damages which the state sustains because of the act of that person. A person violating this subsection (a) shall also be liable to the state for the costs of a civil action brought to recover any such penalty or damages. 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 106 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 117 of 139 Page ID ) #:487 1 2 475. Defendants, and each of them knowingly presented, or caused to presented, false claims for payment; and/or false records or statements Subsys in 3 4 order get false claims paid; and/or to conceal, avoid, or decrease an obligation to pay 5 or transmit money to the State of Rhode Island Medicaid Program. 6 7 8 9 476. Additionally, Defendants, and each of them gave or caused to be given 'kickbacks' to physicians and other health professionals to induce them to prescribe Subsys, in violation of state law, including 40-8 .2-1, et seq. 10 11 12 4 77. Defendants, and each of them knowingly presented or caused to be presented false claims for payment to the Rhode Island Medicaid Program creating 13 14 15 16 liability for a false claims action pursuant to Rhode Island's State False Claims Act. 478. As a result of the conduct set forth in this count, the State of Rhode Island paid the improper Medicaid claims and has suffered actual damages. 17 18 479. Pursuant to Section 9-1.1-4 of the State False Claims Act, Defendants, 19 and each of them are also liable for attorneys' fees, costs and expenses. 20 21 22 23 480. WHEREFORE, Relator respectfully requests that judgment be entered against Defendants, and each of them, and in favor of the State of Rhode Island as follows: 24 25 26 481. A civil penalty often thousand dollars ($10,000), plus three (3) times the amount of damages which the state sustained because of the act of Defendants; plus 27 28 an award to the state for the costs of this civil; reasonable attorneys fees, costs and SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 107 CASE No .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW 118 of 139 Page ID ,··) Document 33 Filed 06/13/16 Page ) #:488 1 expenses; and any and all other and further relief as this Honorable Court deems fit 2 and proper. 3 COUNTXXIX 4 5 VIOLATION OF THE TENNESSEE MEDICAID FALSE CLAIMS ACT 6 (TENNESSEE 71-5-182 et seq.) 7 8 9 482. The allegations of paragraphs 1 through 266are realleged as though fully set forth herein. 10 11 483. Section 71-5-182 of the Tennessee Medicaid False Claims Act provides 12 in pertinent part: 13 14 15 16 (a)(l) Any person who: (A) Presents, or causes to be presented, to the state a claim for payment under the Medicaid program knowing such claim is false or fraudulent; 17 18 19 20 21 22 23 24 25 26 27 28 (B) Makes, uses, or causes to be made or used, a record or statement to get a false or fraudulent claim under the Medicaid program paid for or approved by the state knowing such record or statement is false; (C) Conspires to defraud the state by getting a claim allowed or paid under the Medicaid program knowing such claim is false or fraudulent; or (D) Makes, uses, or causes to be made or used, a record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the state, relative to the Medicaid program, knowing such record or statement is false; is liable to the state for a civil penalty of not less than five thousand dollars ($5,000) and not more than ten thousand dollars ($10,000), plus three (3) times the amount SECOND AMENDED FALSE CLAIM ACT QU/TAMCOMPLAINTUNDERSEAL 108 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 119 of 139 Page ID ) #:489 of damages which the state sustains because of the act of that person. 1 2 3 4 484. Defendants, and each of them, knowingly presented or caused to be presented false claims for payment to the Tennessee Medicaid Program creating 5 6 liability for a false claims action pursuant to Tennessee's Medicaid False Claims Act. 7 485. Defendants, and each of them, knowingly used or caused the use of false 8 9 10 11 or fraudulent records or statements in order to either get false claims paid. 486. As a result of the conduct set forth in this count, the State of Tennessee paid the improper Medicaid claims and has suffered actual damages. 12 13 14 487. Pursuant to Section 71-5-183 of the Tennessee Medicaid False Claims Act, Defendants, and each of them arev also liable for attorneys' fees, costs and 15 16 17 expenses. 488. WHEREFORE, Relator respectfully requests that judgment be entered 18 against Defendants, and each of them, and in favor of the State of Tennessee as 19 20 21 follows: 489. A civil penalty often thousand dollars ($10,000), plus three (3) times the 22 23 amount of damages which the state sustains because of the act of that person; plus an 24 award of attorneys' fees, costs and expenses; and all further relief that this Honorable 25 26 Court deems fit and proper. 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 109 CASENo . . CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW 33 Filed 06/13/16 Page 120 of 139 Page ID ') Document#:490 ) 1 COUNTXXX 2 VIOLATION OF THE TEXAS MEDICAID FRAUD PREVENTION ACT 3 (TEXAS HUMAN RESOURCE CODE 36.001 -36.117) 4 5 6 490. The allegations of paragraphs 1 through 266are realleged as though fully set forth herein. 7 8 9 491. Section 36.002 of the Texas Medicaid Fraud Prevention Act provides in pertinent part as follows: 10 A person commits an unlawful act if the person: 11 12 13 14 15 16 17 18 (1) knowingly makes or causes to be made a false statement or misrepresentation of a material fact to permit a person to receive a benefit or payment under the Medicaid program that is not authorized or that is greater than the benefit or payment that is authorized; (2) knowingly conceals or fails to disclose information that permits a person to receive a benefit or payment under the Medicaid program that is not authorized or that is greater than the benefit or payment that is authorized; 19 20 21 22 23 24 25 26 27 28 **** (4) knowingly makes, causes to be made, induces, or seeks to induce the making of a false statement or misrepresentation of material fact concerning: (A) the conditions or operation of a facility in order that the facility may qualify for certification or recertification required by the Medicaid program, including certification or recertification as: (I) a hospital; (ii) a nursing facility or skilled nursing facility; (iii) a hospice; (iv) an intermediate care facility for the mentally retarded; (v) an assisted living facility; or (vi) a home health agency; or SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 110 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 121 of 139 Page ID #:491 1 2 (B) information required to be provided by a federal or state law, rule, regulation, or provider agreement pertaining to the Medicaid program; 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 (5) except as authorized under the Medicaid program, knowingly pays, charges, solicits, accepts, or receives, in addition to an amount paid under the Medicaid program, a gift, money, a donation, or other consideration as a condition to the provision of a service or product or the continued provision of a service or product if the cost of the service or product is paid for, in whole or in part, under the Medicaid program; **** (9) knowingly enters into an agreement, combination, or conspiracy to defraud the state by obtaining or aiding another person in obtaining an unauthorized payment or benefit from the Medicaid program or a fiscal agent; **** (12) knowingly makes, uses, or causes the making or use of a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to this state under the Medicaid program. 19 20 21 492. Defendants, and each of them knowingly presented, or caused to presented, false records or statements regarding Subsys in order to get false claims 22 23 24 paid and or in order conceal, avoid, or decrease an obligation to pay or transmit money to the State of Texas Medicaid Program. 25 26 27 493. Additionally, Defendants, and each of them gave or caused to be given 'kickbacks' to physicians and other health care professionals to induce them to 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 111 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW 33 Filed 06/13/16 Page 122 of 139 Page ID 'l Document#:492 ) I 1 prescribe Subsys, in violation of state law, including Tex. Hum. Res. Code§§ 32.039, 2 32.0391, and 36.002(a)(5). 3 4 494. Defendants, and each of them knowingly presented or caused to be 5 presented false claims for payment to the Texas Medicaid Program creating liability 6 for a false claims action pursuant to Texas's Medicaid Fraud Prevention Act. 7 8 9 495. As a result of the conduct set forth in this count, the State of Texas paid the improper Medicaid claims and has suffered actual damages. 10 11 496. Section 36.052 of the Texas Medicaid Fraud Prevention Act provides in 12 pertinent part as follows: 13 14 15 16 17 18 19 20 21 22 23 24 25 (a) ..., a person who commits an unlawful act is liable to the state for: (I) the amount of any payment or the value of any monetary or in-kind benefit provided under the Medicaid program, directly or indirectly, as a result of the unlawful act, including any payment made to a third party; (2) interest on the amount of the payment or the value of the benefit described by Subdivision (1) at the prejudgment interest rate in effect on the day the payment or benefit was received or paid, for the period from the date the benefit was received or paid to the date that the state recovers the amount of the payment or value of the benefit; (3) a civil penalty of ... (B) not less than $1,000 or more than $10,000 for each unlawful act committed by the person that does not result in injury to a person described by Paragraph (A); and (4) two times the amount of the payment or the value of the benefit described by Subdivision (1). 26 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 112 CASENo .. CV 13-5861 GHK (AJWX) ' Case 2:13-cv-05861-JLS-AJW 123 of 139 Page ID ) Document 33 Filed 06/13/16 Page j #:493 1 497. Pursuant to §36.110 and §36.117 of the Texas Medicaid Fraud 2 Prevention Act, Defendants, and each of them arev also liable for attorneys' fees, 3 4 5 6 7 8 9 costs and expenses. 498. WHEREFORE, Relator respectfully requests that judgment be entered against Defendants, and each of them, and in favor of the State of Texas as follows: 499. The amount of all payments or the value of the monetary or in-kind benefit provided under the Medicaid program, directly or indirectly, as a result of the 10 11 12 unlawful acts of Defendants, and each of them, including any payments made to a third parties; interest on the amount of said payment or the value of said benefit at the 13 14 prejudgment interest rate in effect on the day the payment or benefit was received or 15 paid, for the period from the date the benefit was received or paid to the date that the 16 state recovers the amount of the payment or value of the benefit; a civil penalty of ... 17 18 $10,000 for each unlawful act committed by the person that did not result in injury to 19 a person described by Paragraph 36.052(a)(3)(A); and two times the amount of the 20 21 22 23 payment or the value of the benefit described by Subdivision 36.052(a)(l); plus attorneys' fees, costs and expenses, and any further relief that this Honorable Court deems fit and proper. 24 25 26 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINTUNDER SEAL 113 CASE No .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW ) Document 33 Filed 06/13/16 Page 124 of 139 Page ID #:494 1 COUNTXXXI 2 VIOLATION OF VIRGINIA FRAUD AGAINST TAXPAYERS ACT 3 (VIRGINIA CODE 8.01-216.1 et seq.) 4 5 6 500. The allegations of paragraphs 1 through 266are realleged as though fully set forth herein. 7 8 501. Section 8.01-216.3 of the Virginia Fraud Against Taxpayers Act 9 provides in pertinent part as follows: 10 A. Any person who: 11 12 13 1. Knowingly presents, or causes to be presented, to an officer or employee of the Commonwealth a false or fraudulent claim for payment or approval; 14 15 16 2. Knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Commonwealth; 17 18 3. Conspires to defraud the Commonwealth by getting a false or fraudulent claim allowed or paid; 19 20 21 22 7. Knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Commonwealth; 23 24 25 26 shall be liable to the Commonwealth for a civil penalty of not less than $5,000 and not more than $10,000, plus three times the amount of damages sustained by the Commonwealth. 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 114 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 125 of 139 Page ID #:495 1 502. Defendants, and each of them obtained or attempted to obtain benefits or 2 payments pursuant to the Virginia Fraud Against Taxpayers Act and any amendments 3 4 5 thereto as provided for in Va. Code§ 8.01-216.3 in a greater amount than that to which it was entitled by means of willful false statements and misrepresentations 6 regarding Subsys, which caused a loss to the Commonwealth of Virginia. 7 8 9 503. Additionally, Defendants, and each of them gave or caused to be given 'kickbacks' to physicians and other health professionals to induce them to prescribe 10 11 12 Subsys, in violation of state law, including Virginia Code§ 32.1-315. 504. For each violation of the statute, the Commonwealth of Virginia is 13 14 entitled to recover treble damages from Defendants, and each of them. See Va. Code 15 § 8.01-216.3. 16 505. WHEREFORE, the Relator respectfully requests this Court to enter 17 18 judgment for the Commonwealth of Virginia and against Defendants, and each of 19 them, for an amount of three times the amount of damages sustained by the 20 21 22 Commonwealth of Virginia and a civil penalty of $10,000 for each act of submitting false statements by INSYS, Kapoor, Babich, and Burlakoff. 23 24 25 26 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 115 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 126 of 139 Page ID ) #:496 1 COUNTXXXII 2 VIOLATION OF THE WASHINGTON STATE 3 MEDICAID FRAUD FALSE CLAIMS ACT 4 RCE 74.66.005 et. Seq 5 6 7 506. The allegations of paragraphs 1 through 266 are realleged as though fully set forth herein. 8 9 507. A person is "liable to the government entity for a civil penalty of not less 10 than five thousand five hundred dollars and not more than eleven thousand dollars, 11 plus three times the amount of damages which the government entity sustains 12 13 because of the act of that person if the person: (a) Knowingly presents or causes to be 14 presented a false or fraudulent claim for payment or approval; (b) Knowingly makes, 15 16 uses, or causes to be made or used, a false record or statement material to a false or 17 fraudulent claim; c) conspires to commit one or more of the violations of this 18 19 20 21 subsection (1); (d) has possession, custody, or control of property or money used, or to be used by the government entity and, knowingly delivers, or causes to be delivered, less than all of that money or property ... (g) Knowingly makes, uses, or 22 23 causes to be made or used, a false record or statement material to an obligation to pay 24 or transmit money or property to the government entity." 25 26 27 508. Pursuant Section 188(3) of the New York False Claims Act, proof of specific intent to defraud is not required. 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 116 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 127 of 139 Page ID #:497 1 509. Defendants, and each of them knowingly presented, or caused to 2 presented, false or fraudulent claims for payment or approval; false records or 3 4 5 statements to get a false or fraudulent claim paid; and/or to conceal, avoid, or decrease an obligation to pay or transmit money to the Washington State Medicaid 6 Program. 7 8 9 510. Additionally, Defendants, and each of them gave or caused to be given 'kickbacks' to physicians and other health professionals to induce them to prescribe 10 11 12 Subsys, in violation of state law, including RCW 74.09.240. 511. Additionally, Defendants, and each of them had possession, custody, or 13 14 control over money which should have been delivered to the Washington State 15 Medicaid Program, and caused less than all of that money to be delivered. 16 512. As a result of the conduct set forth in this count, the State of Washington 17 18 paid the improper Medicaid claims and has suffered additional actual damages. 19 513. Pursuant to RCW 74.66.070(1)© of the Washington State Medicaid 20 21 22 23 Fraud False Claims Act, the court may award reasonable attorneys' fees, reasonable expenses, and costs, against Defendants, and each of them .. 514. WHEREFORE, Relator respectfully requests that judgment be entered 24 25 26 in favor of the State of Washington and against Defendants, and each of them, as follows: 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 117 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 128 of 139 Page ID ) ) #:498 1 2 515. A civil penalty of eleven thousand dollars, plus three times the amount of damages which the state sustained because of the acts of Defendants; plus costs, 3 4 5 reasonable attorneys' fees, reasonable expenses, and any and all further relief that this Honorable Court deems fit and proper. 6 7 COUNT XXXIII 8 ILLEGAL RETALIATION IN VIOLATION OF 9 FEDERAL FALSE CLAIMS ACT; 31 U.S.C. §3730(h), 10 AGAINST INSYS THERAPEUTICS, ONLY 11 516. Guzman realleges and incorporates the allegations from Paragraphs 1 12 13 through 266, inclusive, as though fully set forth therein 14 517. Through reporting about and attempting to stop some of the fraudulent 15 16 conduct of Defendants, Relator was threatened, discriminated against, and ultimately l 7 fired by INSYS Therapeutics because of lawful acts done by her in furtherance of 18 19 20 21 conduct protected by 31 U.S.C. §3729, et. seq. 518. Relator is entitled to all relief necessary to make her whole, including reinstatement with the same seniority to the position she had before she was illegally 22 23 fired, 2 times the amount of back pay lost, interest on the back pay, and compensation 24 for any special damages sustained as a result of this illegal retaliation. 25 26 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 118 CASENo . . CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 129 of 139 Page ID #:499 COUNT XXXIV 1 2 ILLEGAL RETALIATION IN VIOLATION OF 3 FLORIDA FALSE CLAIMS ACT; §68.088 FLORIDA STATUTES, 4 AGAINST INSYS THERAPEUTICS, ONLY 5 6 7 519. Guzman realleges and incorporates the allegations from Paragraphs 1 through 266, inclusive, as though fully set forth therein 8 9 520. Through reporting about and attempting to stop some of the fraudulent 10 conduct of Defendants, Relator was threatened, discriminated against, and ultimately 11 fired by INSYS Therapeutics because of lawful acts done by her in furtherance of 12 13 conduct protected under this Act. 14 521. By its terms, §68.088 protects "[A]ny employee" who engages in 15 16 protected conduct, thus broadening, for purposes of the Florida FCA, the more 17 limited set of employees protected under the more general statute, the "Whistle- 18 19 20 21 Blower Act", §§ 112.3187 - 112.31895. 522. Moreover, because of the seal requirements peculiar to the Florida False Claims Act, Relator is, by definition, excused from strict compliance with the 22 23 requirement that she report the fraud to the Florida Commission on Human Relations 24 and follow the administrative process for required reporting while this Action 25 26 27 28 remains under seal. 523. Relator is entitled to all relief necessary to make her whole, including reinstatement with the same seniority to the position she had before she was illegally SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 119 CASENo . . CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 130 of 139 Page ID ) #:500 1 fired, back pay lost, interest on the back pay, and compensation for any special 2 damages sustained as a result of this illegal retaliation. 3 4 5 6 7 COUNTXXXV ILLEGAL RETALIATION IN VIOLATION OF PUBLIC POLICY; §§448.102-104, FLORIDA STATUTES, AGAINST INSYS THERAPEUTICS, ONLY 8 9 524. Guzman realleges and incorporates the allegations from Paragraphs 1 1O through 266, inclusive, as though fully set forth therein 11 525. Guzman objected to INSYS' illegal practices which were endangering 12 13 patients and resisted those practices. This was known to her supervisors to whom she 14 complained. She was fired in retaliation for this .. 15 16 17 526. Relator is entitled to all relief necessary to make her whole, including reinstatement with the same seniority to the position she had before she was illegally 18 19 20 fired, back pay lost, interest on the back pay, and compensation for any special damages sustained as a result of this illegal retaliation. 21 22 23 24 25 26 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 120 CASENo . . CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 131 of 139 Page ID l #:501 1 PRAYER FOR RELIEF 2 WHEREFORE, the Relator Maria Guzman, acting on behalf of and in the 3 4 name of the United States of America, and the various States and on her own behalf, 5 prays that judgment be entered against Defendant, and each of them, for violation of 6 the False Claims Acts as follows: 7 8 1. In favor of the United States against the Defendants and each of them for 9 10 treble damages to the Federal Government from the submission of false 11 claims, and the maximum civil penalties for each violation of the False 12 13 14 15 Claims Act; 2. In favor of the Relator for the maximum amount pursuant to 31 U.S.C. § 3739(d) to include reasonable expenses, attorney fees, and costs incurred by 16 17 18 the Relator; 3. In favor of each State identified hereinabove against the Defendants and 19 20 each of them for treble damages to the Federal Government from the 21 submission of false claims, and the maximum civil penalties for each 22 23 24 25 violation of the False Claims Act; 4. In favor of Relator for the maximum amount allowed pursuant to each State False Claims Act; 26 27 5. For all costs of the False Claims Act civil action; 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 121 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 132 of 139 Page ID \ ) #:502 1 2 6. For the Relator on her retaliation causes of action under 31 U.S.C. §3730(h), against Defendant INSYS Therapeutics, only, reinstatement with 3 4 5 the same seniority to the position she had before she was illegally fired, 2 times the amount of back pay lost, interest on the back pay, and 6 7 8 compensation for any special damages sustained as a result of this illegal retaliation. 9 10 7. For the Relator on her causes of action under §68.088 Florida Statutes and 11 §§448.102 - 104, Florida statutes, against Defendant INSYS Therapeutics, 12 13 14 15 16 17 only, all relief necessary to make her whole, including reinstatement with the same seniority to the position she had before she was illegally fired, back pay lost, interest on the back pay, and compensation for any special damages sustained as a result of this illegal retaliation; and 18 19 20 8. In favor of the Relator, the United States, and each State set forth hereinabove for further relief as this court deems just and equitable. 21 22 23 24 25 26 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 122 CASENo . . CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 133 of 139 Page ID ) #:503 Respectfully submitted, 1 2 Dated: June 13, 2016 3 THE EMPLOYMENT LAW GROUP 4 LAW OFFICE OF MARK KLEIMAN 5 6 7 By:D~~ California Bar No. 184562 R. Scott Oswald, Esq. (to be admitted pro hac vice) The Employment Law Group, P.C. 888 17th Street, NW, Suite 900 Washington, D.C. 20006 (202) 261-2802 (202) 261-2835 (facsimile) dscher@employmentlawgroup.com soswald@employmentlawgroup.com 8 9 10 11 12 13 14 15 16 17 18 19 20 By: Mark leiman, sq. Law ffice of Mark Allen Kleiman mkleiman@quitam.org 2907 Stanford Avenue Venice, California 90292 310-306-8094 21 22 Attorneys for Qui Tam Plaintiff 23 24 25 26 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 123 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW -) Document 33 Filed 06/13/16 )Page 134 of 139 Page ID #:504 1 2 DEMAND FOR A JURY TRIAL Pursuant to Rule 38 of the Federal Rules of Civil Procedure and pursuant to the 3 4 local rules of this Court, the Relator demands a jury trial as to all issues so triable. 5 Respectfully submitted, 6 7 Dated: June 13, 2016 8 THE EMPLOYMENT LAW GROUP 9 LAW OFFICE OF MARK KLEIMAN 10 11 12 By:~~h~ 13 California Bar No. 184562 R. Scott Oswald, Esq. (to be admitted pro hac vice) The Employment Law Group, P.C. 888 17th Street, NW, Suite 900 Washington, D.C. 20006 (202) 261-2802 (202) 261-2835 (facsimile) dscher@employmentlawgroup.com soswald employmentlawgroup.com 14 15 16 17 18 19 20 21 22 23 24 25 By: Mark leiman, Esq. Law O ice of Mark Allen Kleiman mkleiman@quitam.org 2907 Stanford Avenue Venice, California 90292 310-306-8094 26 27 Attorneys for Qui Tam Plaintiff 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 124 CASENo .. CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 135 of 139 Page ID ) #:505 1 CERTIFICATE OF SERVICE 2 3 4 I HEREBY CERTIFY that a true and correct copy of the foregoing SECOND AMENDED COMPLAINT FOR VIOLATIONS OF THE FEDERAL FALSE 5 6 CLAIMS ACT AND STATE FALSE CLAIMS ACTS was served via USPS 7 Certified Mail/ Return Receipt Requested, on this 13th day of June, 2016, 8 upon the addressees listed on the attached Service List. 9 10 11 12 ~AL~-----MarltKleiman 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 125 CASENo . . CV 13-5861 GHK (AJWX) .. ------------- Case 2:13-cv-05861-JLS-AJW 33 Filed 06/13/16 Page 136 of 139 Page ID ) Document#:506 1 SERVICE LIST 2 3 4 5 6 Loretta E. Lynch, Esq. Attorney General of the United States Office of the Attorney General, Civil Division U.S. Department of Justice 950 Pennsylvania Avenue, NW Washington, DC 20530-0001 Andre Birotte, Esq. United States Attorney General United States Attorney's Office Central District of California 312 North Spring Street Suite 1200 Los Angeles, California 90012 Abraham Meltzer, Esq. Assistant United States Attorney Civil Fraud Section Federal Building, Suite 7516 300 N. Los Angeles St. Los Angeles, California 90012 Phone:213-894-7155 Wendy Weiss, Esq. Chief, Civil Fraud Division United States Attorney's Office Central District of California 300 N. Los Angeles St., Room 7516 Los Angeles, CA 90012 Phone:213-894-0444 John Lee Assistant United States Attorney United States Attorney's Office Central District of California 300 N. Los Angeles St. Los Angeles, California 90012 Phone: 213-894-3995 CALIFORNIA Martin Horan Acting Director, MFCU Medicaid Fraud Control Unit of California Office of the Attorney General 1425 River Park Drive, Ste. 300 Sacramento, CA 95815 Tel: 916-263-4675 / Fax: 916-263-0864 E-mail: martinjr.horan@doj.ca.gov 7 8 9 10 11 12 13 14 15 16 17 18 Erika Hiramatsu Bureau of Medi-Cal Fraud Office of the Attorney General California Department of Justice 1455 Frazee Rd Suite 315 San Diego, CA 92108 (619) 688-7906 Erika.Hiramatsu@doj.ca.gov 19 20 21 22 23 24 25 26 27 28 DELAWARE Christina Showalter Director, MFCU Medicaid Fraud Control Unit of Delaware Office of the Attorney General 820 N French Street, 5th Floor Wilmington, DE 19801 Tel: 302-577-8859 / Fax: 302-577-3090 E-mail: Christina.showalter@state.de.us DISTRICT OF COLUMBIA Brent Wolfingbarger Director, MFCU Medicaid Fraud Control Unit of D.C. Office ofD.C. Inspector General 717 14th St., N.W., Suite 430 Washington, DC 20005 Tel: 202-727-2245 / Fax: 202-727-5937 E-mail: brent. wolfingbarger@dc.gov SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAINT UNDER SEAL 126 CASENo . . CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 )Page 137 of 139 Page ID \ / #:507 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 FLORIDA James D. Varnado Director, MFCU Medicaid Fraud Control Unit of Florida Office of the Attorney General PL-01 The Capitol Tallahassee, Florida 32399 Tel: 850-414-3488 / Fax: 850-921-5194 E-mail: james.varnado@myfloridalegal.com GEORGIA Van Pearlberg Director, MFCU Medicaid Fraud Control Unit of Georgia Office of the Attorney General 200 Piedmont Avenue S.E. West Tower, 19th Floor Atlanta, GA 30334 Tel: 404-656-5400 / Fax: 404-656-5444 E-mail: vpearlberg@law.ga.gov HAWAII Christopher Young Director, MFCU Medicaid Fraud Control Unit of Hawaii Office of the Attorney General 333 Queen Street, 10th Floor Honolulu, HI 96813 Tel: 808-586-1169 / Fax: 808-586-1077 E-mail: christopher.d.young@hawaii.gov ILLINOIS Brian Ley Director, MFCU Medicaid Fraud Control Bureau 801 South 7th St, 500A Springfield, IL 62703 Tel: 217-785-3321 / Fax: 217-524-6405 E-mail: brian ley@isp.state.il.us INDIANA Matthew Whitmire Director, MFCU Medicaid Fraud Control Unit oflndiana Office of the Attorney General 8005 Castleway Drive Indianapolis, IN 46250-1946 Tel: 317-915-5300/Fax: 317-232-6523 E-mail: matthew.whitmire@atg.in.gov LOUISIANA Fred A Duhy Jr. Director, MFCU Medicaid Fraud Control Unit of Louisiana Office of the Attorney General PO Box 94005 Baton Rouge, LA 70804-9005 Tel: 225-326-6210 / Fax: 225-326-6295 E-mail: duhyf@ag.state.la.us Lawrence J. Carcare II Deputy Attorney General Medicaid Fraud Control Unit Office of Indiana Attorney General Greg Zoeller 8005 Castleway Drive Indianapolis, IN 46250 P 317.915.5319 F 317.232.7979 Lawrence.Carcare@atg.in. gov 26 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 127 CASENo . . CV 13-5861 GHK (AJWX) Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 )Page 138 of 139 Page ID ) #:508 1 2 3 4 5 6 MASSACHUSETTS George Zachos Director, MFCU Medicaid Fraud Control Unit of Massachusetts Office of the Attorney General One Ashburton Place Boston, MA 02108 Tel: 617-963-2033 / Fax: 617-722-2008 E-mail: george.zachos@state.ma.us MICHIGAN David Tanay Director, MFCU Medicaid Fraud Control Unit of Michigan Office of the Attorney General 2860 Eyde Parkway East Lansing, MI 48823 Tel: 517-241-6509 / Fax: 517-241-6515 E-mail: tanayd@michigan.gov MINNESOTA Chuck Roehrdanz Director, MFCU Medicaid Fraud Control Unit of Minnesota Office of the Attorney General 445 Minnesota St. 1200 Bremer Tower Saint Paul, MN 55101-2219 Tel: 651-757-1299 / Fax: 651-282-5801 E-mail: chuck.roehrdanz@ag.state.mn.us MONTANA Debrah F osket Director, MFCU Medicaid Fraud Control Unit of Montana Division of Criminal Investigation 2225 11th A venue P.O. Box 201417 Helena, MT 59620-1417 Tel: 406-444-4606 / Fax: 406-444-7913 E-mail: dfosket@mt.gov NEVADA Mark N. Kemberling Director, MFCU Medicaid Fraud Control Unit of Nevada Office of the Attorney General 555 East Washington Ave., Ste. 3900 Las Vegas, NV 89101 Tel: 702-486-3111 / Fax: 702-486-3871 E-mail: mkemberling@ag.nv.gov NEW HAMPSHIRE Karin M. Eckel Director, MFCU Medicaid Fraud Control Unit of New Hampshire Office of the Attorney General 33 Capitol Street Concord, NH 03301-6397 Tel: 603-271-1256 / Fax: 603-223-6216 E-mail: Karin.eckel@doj.nh.gov NEW JERSEY Peter Sepulveda Director Medicaid Fraud Control Unit of New Jersey Office of the Attorney General One Appollo Drive Whippany, NJ 07981 Tel: 609-984-7346 / Fax: 609-292-7410 E-mail: sepulvedap@njdcj.org NEW MEXICO Patricia Tucker Director, MFCU Medicaid Fraud Control Unit of New Mexico Office of the Attorney General 111 Lomas NW, Suite 300 Albuquerque, NM 87102 Tel: 505-222-9082 / Fax: 505-222-9007 E-mail: ptucker@nmag.gov 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAMCOMPLAlNT UNDER SEAL 128 CASENo .. CV 13-5861 GHK (AJWX) , ') \ Case 2:13-cv-05861-JLS-AJW Document 33 Filed 06/13/16 Page 139 of 139 Page ID ) #:509 1 2 3 4 5 6 NEWYORK Amy Held Acting Director, MFCU Medicaid Fraud Control Unit of New York Office of the Attorney General 120 Broadway, 13th Floor New York, NY 10271 Tel: 212-417-5250 / Fax: 212-417-4284 E-mail: amy.held@ag.ny.gov E-mail: chobgood@ncdoj.gov 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NORTH CAROLINA Charles Hobgood Director, MFCU Medicaid Fraud Control Unit of North Carolina Office of the Attorney General 5505 Creedmoor Rd., Suite 300 Raleigh, NC 27612 Tel: 919-881-2320 / Fax: 919-571-4837 OKLAHOMA Ms.MykelFry Director, MFCU Medicaid Fraud Control Unit of Oklahoma Office of the Attorney General 313 N.E. 21st Street Oklahoma City, OK 73105 Tel: 405-522-2962 / Fax: 405-522-4875 E-mail: mykel.fry@oag.ok.gov TENNESSEE Norman Tidwell Director, MFCU Medicaid Fraud Control Unit of Tennessee Bureau of Investigation 901 R.S. Gass Boulevard Nashville, TN 37216-2639 Tel: 615-744-4322 / Fax: 615-744-4659 E-mail: norman. tidwell@tn.gov VIRGINIA Randall L. Clouse Director, MFCU Medicaid Fraud Control Unit of Virginia Office of the Attorney General 900 E Main Street, 5th Floor Richmond, VA 23219 Tel: 804-692-0171 I Fax: 804-786-3509 E-mail: rclouse@oag.state.va.us RHODE ISLAND James F. Dube Director, MFCU Medicaid Fraud Control Unit of Rhode Island Office of the Attorney General 150 S Main Street Providence, RI 02903 Tel: 401-274-4400 x 2410 / Fax: 401-222-3014 E-mail: jdube@riag.ri.gov TEXAS Stormy Kelly Director, MFCU Medicaid Fraud Control Unit of Texas Office of the Attorney General 6330 Hwy 290 East, Suite 250 Austin, TX 78723 Tel: 512-371-4767 I Fax: 512-320-0974 E-mail: stormy.kelly@texasattomeygeneral.gov WASHINGTON Douglas D. Walsh Director, MFCU Medicaid Fraud Control Unit of Washington Office of the Attorney General P.O. Box 40114 Olympia, WA 98504-0114 Tel: 360-586-8872 I Fax: 360-586-8877 E-mail: dougw@atg.wa.gov 24 25 26 27 28 SECOND AMENDED FALSE CLAIM ACT QUI TAM COMPLAINT UNDER SEAL 129 CASENo .. CV 13-5861 GHK (AJWX)