Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 1 of 38 Page ID #:20 «©: IPY 1 THE WEISER LAW FIRM, P .C. KATHLEEN A. HERKENHOFF (168562) 2 12707 High Bluff Drive, Suite 200 3 _San Diego, CA 92130 Telephone: (858) 794-1441 4 Facsimile: (858) 794-1450 5 kah@weiserlawfirm.com 1 6 Attorneys for Qui Tam Plaintiffs 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 UNITED STA TES OF Ai\1ERICA, ex rel., JOHN DOE and ABC, LLC, 11 Plaintiffs, 12 vs. 13 INSYS THERAPEUTICS, INC, ALEC 14 BURLAKOFF and MICHAEL L. BABICH, 15 Defendants. 16 17 18 19 20 21 22 23 24 25 26 27 28 Cc'{Nlt is -, 34 88iSb~ /(:>? FILED UNDER SEAL PURSUANT TO 31 U.S.C. §3730 DO NOT PLACE IN PRESS BOX DO NOT ENTER IN PACER COMPLAINT FOR DAMAGES UNDER THE FEDERAL FALSE CLAIMS ACT DEMAND FOR JURY TRIAL Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 2 of 38 Page ID #:21 1 1. The United States of America (the “Government” or “United States”), by 2 and through their qui tam Relators, John Doe and ABC, LLC (the “Relators” or “Qui 3 Tam Plaintiffs”), bring this action under the Federal False Claims Act, 31 U.S.C. 4 §3729-3733, et seq. (the “False Claims Act” or “FCA”) against Insys Therapeutics, 5 Inc. (“Insys”), Alec Burlakoff (“Burlakoff”), and Michael L. Babich (“Babich”) 6 (collectively, “Defendants”) to recover all damages, penalties, and other remedies 7 provided by the False Claims Act on behalf of the United States and the Relators, and 8 for their complaint allege as follows. 9 2. Based on the Relators’ personal knowledge and further investigation, 10 from at least June 2013 through the present, sufficient evidence, including statements 11 by the Relators as well as documents and other information they have obtained, exists 12 to allege that Defendants have violated and continue to violate the False Claims Act, 13 31 U.S.C. §3729, and the federal Anti-Kickback Statute, 42 U.S.C. §1320a14 7b(b)(2)(B) (the “Anti-Kickback Statute”), by submitting fraudulent bills to the 15 Government (and/or through its conduct causing others to submit fraudulent bills to 16 the Government) as a result of off-label marketing and an unlawful kickback scheme 17 in connection with its drug Subsys that was intended to, and did in fact, induce 18 physicians to improperly prescribe Subsys. PARTIES 19 20 3. 21 2013. John Doe (“Relator 1”) worked at Insys from June 2013 through August Relator 1 was one of Insys’ Specialty Sales Representatives and his 22 responsibilities included, among other things, assisting in launching Insys’ pain 23 management drug Subsys, and conducting in-services with physicians, staffs, and 24 pharmacists. 25 4. ABC, LLC is a Delaware Limited Liability Company whose main 26 address is 800 Delaware Avenue, Wilmington, DE, and which was formed for the 27 purpose of bringing this action. 28 5. Plaintiff United States of America, acting through the Department of -1- Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 3 of 38 Page ID #:22 1 Health and Human Services (“HHS”), and its Centers for Medicare and Medicaid 2 Services (“CMS”), administers the Health Insurance Program for the Aged and 3 Disabled established by Title XVIII of the Social Security Act, 42 U.S.C. §§1395, et 4 seq. (“Medicare”). 5 6. Defendant Insys is a specialty pharmaceutical company that develops and 6 commercializes supportive care products. In March 2012, Insys launched Sybsys, a 7 proprietary sublingual fentanyl spray approved for breakthrough cancer pain in 8 opioid-tolerant patients. 9 7. Defendant Burlakoff is Insys’ Vice President of Sales. 10 8. Defendant Babich is Insys’ Chief Executive Officer. JURISDICTION AND VENUE 11 12 9. Jurisdiction in this Court is proper pursuant to 31 U.S.C. §§3732(a) and 13 3730(b). This Court also has jurisdiction pursuant to 28 U.S.C. §1331. 14 10. The Court may exercise personal jurisdiction over the Defendants, and 15 venue is proper in this Court pursuant to 31 U.S.C. §3732(a) and 28 U.S.C. §1391 16 because the acts proscribed by 31 U.S.C. §§3729 et seq., and complained of herein 17 took place in part in this District and the Defendants transacted business in this 18 District as described herein. 19 11. Pursuant to 31 U.S.C. §3730(b)(2), Relators prepared and will serve the 20 complaint on the Attorney General of the United States, and the United States 21 Attorney for the Central District for the District of California, as well as a statement of 22 all material evidence and information currently in its possession and of which it is the 23 original source. These disclosure statements are supported by material evidence 24 known to the Relators at the time of filing establishing the existence of Defendants’ 25 false claims. Because the statements include attorney-client communications and 26 work product of Relators’ attorneys, and will be submitted to those federal officials in 27 their capacity as potential co-counsel in the litigation, Relators understand these 28 disclosures to be confidential and exempt from disclosure under the Freedom of -2- Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 4 of 38 Page ID #:23 1 Information Act. 5 U.S.C. §552; 31 U.S.C. §3729(c). LEGAL BACKGROUND 2 3 The False Claims Act 4 12. The False Claims Act provides, in pertinent part: 5 (a) Liability for Certain Acts. 6 (1) In general. – Subject to paragraph (2), any person who – 7 (A) knowingly presents, or causes to be presented, a false 8 or fraudulent claim for payment or approval; 9 (B) knowingly makes, uses, or causes to be made or used, a 10 false record or statement material to a false or fraudulent 11 claim; 12 (C) conspires to commit a violation of subparagraph (A), 13 (B), (D), (E), (F), or (G); 14 (D) has possession, custody, or control of property or 15 money used, or to be used, by the Government and 16 knowingly delivers, or causes to be delivered, less than all 17 of that money or property; 18 (E) is authorized to make or deliver a document certifying 19 receipt of property used, or to be used, by the Government 20 and, intending to defraud the Government, makes or 21 delivers the receipt without completely knowing that the 22 information on the receipt is true; 23 (F) knowingly buys, or receives as a pledge of an obligation 24 or debt, public property from an officer or employee of the 25 Government, or a member of the Armed Forces, who 26 lawfully may not sell or pledge property; or 27 (G) knowingly makes, uses, or causes to be made or used, a 28 false record or statement material to an obligation to pay or -3- Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 5 of 38 Page ID #:24 1 transmit money or property to the Government, or 2 knowingly conceals or knowingly and improperly avoids or 3 decreases an obligation to pay or transmit money or 4 property to the Government, is liable to the United States 5 Government for a civil penalty of not less than $5,000 and 6 not more than $10,000, as adjusted by the Federal Civil 7 Penalties Inflation Adjustment Act of 1990 (28 U.S.C. 8 §2461 (notes); Public Law 104-410), plus 3 times the 9 amount of damages which the Government sustains 10 because of the act of that person. 11 (3) Costs of civil actions. – A person violating this subsection 12 shall also be liable to the United States Government for the costs of a 13 civil action brought to recover any such penalty or damages. 14 (b) Definitions. – For purposes of this section – 15 16 (1) the terms “knowing” and “knowingly” – (A) mean that a person, with respect to information – 17 (i) has actual knowledge of the information; 18 (ii) acts in deliberate ignorance of the truth or falsity 19 of the information; or 20 (iii) acts in reckless disregard of the truth or falsity 21 of the information; and 22 23 (B) require no proof of specific intent to defraud; (2) the term “claim” – 24 (A) means any request or demand, whether under a contract 25 or otherwise, for money or property and whether or not the 26 United States has title to the money or property, that— 27 (i) is presented to an officer, employee, or agent of 28 the United States; or -4- Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 6 of 38 Page ID #:25 1 (ii) is made to a contractor, grantee, or other 2 recipient, if the money or property is to be spent or 3 used on the Government’s behalf or to advance a 4 Government program or interest, and if the United 5 States Government – 6 (I) provides or has provided any portion of the 7 money or property requested or demanded; or 8 (II) will reimburse such contractor, grantee, or 9 other recipient for any portion of the money or 10 property which is requested or demanded; and 11 (B) does not include requests or demands for money or 12 property that the Government has paid to an individual as 13 compensation for Federal employment or as an income 14 subsidy with no restrictions on that individual’s use of the 15 money or property; 16 (3) the term “obligation” means an established duty, whether or 17 not fixed, arising from an express or implied contractual, grantor- 18 grantee, or licensor-licensee relationship, from a fee-based or similar 19 relationship, from statute or regulation, or from the retention of any 20 overpayment; and 21 (4) the term “material” means having a natural tendency to 22 influence, or be capable of influencing, the payment or receipt of money 23 or property. 24 13. Pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990, 25 as amended by the Debt Collection Improvement Act of 1996, 28 U.S.C. §2461 26 (notes), and 28 C.F.R. §85.1, False Claims Act civil penalties were increased from 27 $5,000 to $11,000 for violations occurring on or after September 29, 1999. 28 -5- Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 7 of 38 Page ID #:26 1 The Anti-Kickback Statute 14. 2 The Anti-Kickback Statute, 42 U.S.C. §1320a-7b(b)(2)(B), prohibits 3 offering to pay or paying any remuneration1 “to any person to induce such person to 4 purchase . . . any good . . . service, or item for which payment may be made in whole 5 or in part under a Federal healthcare program.” Id. Pursuant to the Anti-Kickback 6 Statute, it is unlawful to knowingly offer or pay any remuneration in cash or in kind in 7 exchange for the referral of any product (including a prescription drug product) for 8 which payment is sought from any federally-funded health care program, including 9 Medicare and Medicaid. In order to ensure compliance, every federally-funded health 10 care program requires every provider or supplier to ensure compliance with the 11 provisions of the Anti-Kickback Statute and other federal laws governing the 12 provision of health care services in the United States. 15. 13 The Anti-Kickback Statute is designed to, inter alia, ensure that patient 14 care will not be improperly influenced by inappropriate compensation from the 15 pharmaceutical industry. Kickbacks increase Government-funded health benefit 16 program expenses by inducing medically unnecessary overutilization of prescription 17 drugs and excessive reimbursements. Kickbacks also reduce a patient’s healthcare 18 choices, as physicians may prescribe drug products based on the physician’s own 19 financial interests rather than according to the patient’s medical needs. 16. 20 In accordance with the Anti-Kickback Statute, applicable regulations 21 directly prohibit providers from receiving remuneration paid with the intent to induce 22 referrals or business orders, including the prescription of pharmaceuticals paid as a 23 result of the volume or value of any referrals or business generated. See 42 C.F.R. 24 §1001.952(f). Thus, drug companies may not offer or pay any remuneration, in cash 25 or kind, directly or indirectly, to induce physicians or others to order or recommend 26 drugs that may be paid for by a federal health care program. The law not only 27 28 1 The term “any remuneration” encompasses any kickback, bribe, or rebate, direct or indirect, overt or covert, in cash or in kind. Anti-Kickback Statute, 42 U.S.C. §1320a-7b(b)(1). -6- Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 8 of 38 Page ID #:27 1 prohibits outright bribes and rebate schemes, but also prohibits any payment by a drug 2 company that has as one of its purposes inducement of a physician to write additional 3 prescriptions for the company’s pharmaceutical products. Such remunerations are 4 kickbacks when paid to induce or reward physicians’ prescriptions. 5 17. A violation of the Anti-Kickback Statute constitutes a felony punishable 6 by a maximum fine of $25,000, imprisonment up to five years, or both. Any party 7 convicted under the Anti-Kickback Statute must be excluded from federal health care 8 programs for a term of at least five years. 42 U.S.C. §1320a-7(b). 9 18. Compliance with the Anti-Kickback Statute is required for 10 reimbursement of claims from federal health care programs, and claims made in 11 violation of the law are actionable civilly under the FCA. See 42 U.S.C. §1320a-7b(g) 12 (2010) (stating, in part, that a “claim that includes items or services resulting from a 13 violation of . . . [the Anti-Kickback Statute] constitutes a false or fraudulent claim for 14 purposes of [the FCA]. . . .”); United States ex rel. Wilkins v. United Health Group, 15 Inc., 659 F.3d 295 (3d Cir. 2011). The Anti-Kickback Statute was amended in March 16 2010 as part of the Patient Protection and Affordable Care Act (“PPACA”), which 17 clarified that all claims resulting from a violation of the Anti-Kickback Statute are 18 also a violation of the FCA. 42 U.S.C. §1320a-7(b)(g). The PPACA also amended the 19 Social Security Act’s “intent requirement” to make clear that violations of its anti20 kickback provisions, like violations of the FCA, may occur even if an individual does 21 “not have actual knowledge” or “specific intent to commit a violation.” Public Law 22 No. 111-148, §6402(h). 23 19. The Office of the Inspector General of the Department of Health and 24 Human Services (“HHS-OIG”), in April 2003, issued its Compliance Program 25 Guidance for Pharmaceutical Manufacturers, a document meant to provide an 26 overview of pharmaceutical manufacturer compliance guidelines. HHS-OIG has 27 stated that any time “a pharmaceutical manufacturer provides anything of value to a 28 physician who might prescribe the manufacturer’s product, the manufacturer should -7- Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 9 of 38 Page ID #:28 1 examine whether it is providing a tangible benefit to the physician with the intent to 2 induce or regard referrals.” HHS-OIG Guidance to Pharmaceutical Manufacturers, 3 April 2003, p. 28 (emphasis added).2 4 20. Compliance with the Anti-Kickback Statute is a condition of payment 5 under federal health care programs. Therefore any violation of the Anti-Kickback 6 Statute is a violation of the False Claims Act because claims seeking payment for 7 services or prescriptions tainted by kickbacks are “factually false,” and therefore do 8 not meet the conditions of payment from federal health care programs. 9 The Stark Law 10 21. The Stark Law, 42 U.S.C. §1395nn, et seq., prohibits a pharmaceutical 11 manufacturer from paying remuneration to physicians for referring Medicaid and/or 12 Medicare patients to the manufacturer for certain “designated health services,” 13 including drug prescriptions, where the referring physician has a nonexempt “financial 14 relationship” with that manufacturer. 42 U.S.C. §1395nn(a)(1), (h)(6). The Stark Law 15 provides that the manufacturer shall not cause to be presented a Medicare or Medicaid 16 claim for such prescriptions. The Stark Law also prohibits payment of claims for 17 prescriptions rendered in violation of its provisions. 42 U.S.C. §1395nn(a)(1), (g)(1). 18 22. Knowingly paying physicians to induce them to prescribe a prescription 19 drug on-label or off-label for individuals seeking reimbursement for the drug from a 20 federal health program or causing others to do so, while certifying compliance with 21 the Stark Law (or while causing another to so certify), or billing the Government as if 22 in compliance with these laws, violates the FCA. FACTUAL BACKGROUND 23 24 I. Overview of Medicare and its Benefits 25 23. Medicare is a federal health insurance system for people 65 and older and 26 for people under 65 with certain disabilities. 27 28 2 HHS-OIG Guidance to Pharmaceutical Manufacturers, April 2003, p. 28, available at http://oig.hhs.gov/fraud/docs/complianceguidance/042803pharmacymfgnonfr.pdf. -8- Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 10 of 38 Page ID #:29 1 24. Medicare Part D began January 1, 2006 and pays for prescription drug 2 benefits for the elderly and disabled. 42 U.S.C. §1395w-101 et seq. All persons 3 enrolled in Medicare Part A and/or Medicare Part B are eligible to enroll in a 4 prescription drug plan under Part D. HHS, through its component agency, CMS, 5 contracts with private companies (or “sponsors”) authorized to sell Part D insurance 6 coverage. Such companies are regulated and subsidized by CMS pursuant to one7 year, annually renewable contracts. 8 25. Medicare Part D requires all participants in the program – prescription 9 drug plan (“PDP”) sponsors, Pharmacy Benefit Managers (“PBM”), and pharmacies – 10 to adhere to all federal laws and regulations, including those designed to prevent 11 fraud, waste, and abuse. 42 C.F.R. §423.505(h)(1). Under CMS regulations, PDP 12 sponsors’ subcontracts with PBMs and pharmacies must contain language obligating 13 the pharmacy to comply with all applicable federal laws, regulations, and CMS 14 instructions. 42 C.F.R. §423.505(i)(3)(v). 15 26. The federal Government’s target is to pay 74.5% of the actual costs of 16 basic prescription drug coverage (as defined at 42 U.S.C. §1395w-1029(a)(3)). 42 17 U.S.C. §1395w-115(a). Rather than a straight reimbursement, however, the 18 Government uses economic incentives and disincentives to encourage both 19 beneficiaries and Part D Plan Sponsors to reduce costs. 42 U.S.C. §1395w-115. 20 27. For beneficiaries, the disincentives for running-up high drug expenditures 21 include requiring them to pay certain amounts out-of-pocket (in the aggregate referred 22 to as a beneficiary’s True Out-Of-Pocket (“TrOOP”)). Those sums include: 23 (a) a beneficiary premium equal to 25.5% of the national weighted 24 average plan bid, as adjusted (approximately $350), 42 U.S.C. §1395w-113(a); 25 (b) a deductible defined as 100% of the first $250, as adjusted 26 (although 90% of Part D Plans eliminate the deductible and use a tiered co-pay), 42 27 U.S.C. §1395w-102(b)(1); 28 (c) thereafter a 25% copay on all costs up to the coverage gap, 42 -9- Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 11 of 38 Page ID #:30 1 U.S.C. §1395w-102(b)(2); (d) 2 100% of costs between $2,250 and $3,600, as adjusted, 42 U.S.C. 3 §1395w-102(b)(3) & (4) (the “coverage gap” or “donut hole”); (e) 4 whereafter, the beneficiary enters the catastrophic coverage phase 5 and only pays a copay of 5%, or $2 for a generic drug and $5 for any other drug. 42 6 U.S.C. §1395w-102(b)(4)(A)(i). 7 28. Since beneficiaries are required to pay a significant copay, and 100% of 8 the cost of drugs while they are in the deductible and coverage gap phases of the 9 program, Medicare Part D provides certain protections to beneficiaries. For example, 10 Sponsors must make the negotiated prices available to beneficiaries regardless of what 11 “phase” of the Part D benefit an enrollee is in (i.e., deductible, ordinary coverage, 12 coverage gap or catastrophic coverage). In addition, that negotiated price must also 13 remain uniform within a particular pharmacy regardless of what phase of the program 14 the beneficiary is in. Prescription Drug Benefit Manual, Ch. 5 “Benefits and 15 Beneficiary Protections,” §20.6 (“the negotiated price for a particular covered Part D 16 drug purchased at a particular pharmacy must always be the same regardless of what 17 phase of the Part D benefit an enrollee is in”). 18 29. Another beneficiary protection is that, while they are in the deductible or 19 coverage gap phases where they pay 100% of the costs, they may avail themselves of 20 a cash price that is better than their PDP’s negotiated price if the pharmacy is offering 21 a “‘special’ price or other discount for all customers, or if the beneficiary is using a 22 discount card.” Prescription Drug Benefit Manual, Ch. 14 “Coordination of Benefits,” 23 at 50.4.2. If the beneficiary makes such a purchase outside of their plan, their 24 expenditure will still count toward their TrOOP if they report it to their plan. Id. 25 30. For Part D Plan Sponsors, the program is a quasi-free market model that 26 uses a variety of incentives which are part of the structure of the program. The 27 starting point is that the program only pays the Sponsor “interim payments . . . based 28 on the Secretary’s best estimate of amounts that will be payable after obtaining all of - 10 - Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 12 of 38 Page ID #:31 1 the information.” 42 U.S.C. §1395w-115(d)(1). In other words, Medicare Part D is 2 not a capitated federal insurance program, but rather an actual cost program. Id.; see 3 42 U.S.C. §1395w-112(g) (prohibiting states from imposing premium taxes on Part D 4 subsidy since, unlike Part C, the payments are not capitated premiums); compare to 42 5 U.S.C. §1395w-114(c)(2) (expressly authorizing capitated payment only for those Part 6 D beneficiaries in the lowest income tier who qualify for greater subsidy). 7 31. In a nutshell, the Sponsor submits a bid based on actuarial data estimating 8 the actual cost of providing prescription drugs to its pool of beneficiaries. The 9 Government then makes “interim payments” to the Sponsor on a monthly basis. As 10 an express condition of receiving those interim payments, the Sponsor is required to 11 submit to the Government truthful and complete data, including actual cost, for every 12 prescription filled. At the end of each year the Government then compares its interim 13 payments to the actual cost data, and determines whether the Sponsor owes a refund to 14 the Government, or whether the Government is required to pay more money in order 15 to meet its subsidy target. In order to further incentivize the Sponsor to keep costs 16 down, however, the refund or additional payment is first subject to risk corridors 17 which penalize the Sponsor if actual costs exceed its bid, and reward the Sponsor if 18 actual costs are below its bid. 42 U.S.C. §1395w-115(e). As a practical matter, these 19 risk corridors would only slightly increase or decrease the total percentage paid by the 20 Government for each prescription. 21 II. Medicaid 22 32. Medicaid is a joint federal-state program created in 1965 that provides 23 health care benefits for certain groups, primarily the poor and disabled. The federal 24 portion of each state’s Medicaid payments, known as the Federal Medical Assistance 25 Percentage (“FMAP”), is based on the state’s per capita income compared to the 26 national average. 42 U.S.C. §1396d(b). Among the states, the FMAP is at least 50 27 percent and is as high as 83%. 28 33. The Medicaid program pays for services pursuant to plans developed by - 11 - Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 13 of 38 Page ID #:32 1 the states and approved by the HHS Secretary through CMS. 42 U.S.C. §1396a(a)-(b). 2 States pay doctors, hospitals, pharmacies, and other providers and suppliers of medical 3 items and services according to established rates. 42 U.S.C. §§1396b(a)(1), 4 1903(a)(1). The federal Government then pays each state a statutorily-established 5 share of “the total amount expended . . . as medical assistance under the State plan 6 . . .” See 42. U.S.C. §1396b(a)(1). This federal-to-state payment is known as federal 7 financial participation (“FFP”). 8 34. The Medicaid programs of all states reimburse for prescription drugs. 9 The vast majority of states award contracts to private companies to evaluate and 10 process claims for payment on behalf of Medicaid recipients. Typically, after 11 processing the claims, these private companies then generate funding requests to the 12 state Medicaid programs. Before the beginning of each calendar quarter, each state 13 submits to CMS an estimate of its Medicaid federal funding needs for the quarter. 14 CMS reviews and adjusts the quarterly estimate as necessary, and determines the 15 amount of federal funding each state will be permitted to draw down as it incurs 16 expenditures during the quarter. The state then draws down federal funding as actual 17 provider claims, including claims from pharmacies seeking payment for drugs, are 18 presented for payment. After the end of each quarter, the state then submits to CMS a 19 final expenditure report, which provides the basis for adjustment to the quarterly 20 federal funding amount (to reconcile the estimated expenditures to actual 21 expenditures). 42 C.F.R. §430.30. 22 III. The United States Food, Drug, and Cosmetic Act 23 35. The FDA regulates drugs based on the “intended uses” for such products. 24 Before marketing and selling a prescription drug, a manufacturer must demonstrate to 25 the FDA that the product is safe and effective for each intended use. 21 U.S.C. 26 §§331(d), 355(a). 27 36. The United States Food, Drug and Cosmetic Act (“FDCA”) establishes 28 the framework for regulation of, inter alia, the sales and marketing activities of - 12 - Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 14 of 38 Page ID #:33 1 pharmaceutical manufacturers in the United States, including the introduction of new 2 drugs into interstate commerce. When the United States Food and Drug 3 Administration (“FDA”) approves a drug, it approves the drug only for the particular 4 use for which it was tested. While a physician may prescribe a drug for a use other 5 than the one for which it is approved, the FDCA prohibits a drug manufacturer from 6 marketing or promoting a drug for non-approved uses. 21 U.S.C. §§331(d), 355(a). It 7 therefore is illegal for a drug manufacturer and its sales representatives to initiate 8 discussions with medical professionals regarding any off-label use of a drug. 9 IV. Insys’ Fraudulent Scheme 10 A. False Claims Act Violations 11 37. Defendants have, since at least June 2013, engaged in off-label marking 12 and an unlawful kickback scheme in connection with its drug Subsys that was 13 intended to, and did in fact, induce physicians to improperly prescribe Subsys. These 14 prescriptions were reimbursed by federal health care programs, including Medicare 15 and Medicaid, and therefore were issued in violation of both the Anti-Kickback 16 Statute and the FCA. As a result, the federal Government has been defrauded and 17 suffered a substantial loss. 38. 18 To provide some background, Subsys is a potent opioid analgesic, 19 fentanyl, intended for application to the sublingual mucosa. Subsys is only indicated 20 for the “management of breakthrough pain in cancer patients 18 years of age and older 21 who are already receiving and who are tolerant to opioid therapy for their 22 underlying persistent cancer pain.”3 See Ex. 1 (Subsys packaging insert).4 Patients 23 3 Subsys Prescribing Information, available at 24 http://subsysspray.com/assets/subsys/client_files/files/PrescribingInfo.pdf. 25 4 The Subsys packaging insert contains the Medication Guide and the Highlights of Prescribing Information. The attached exhibit contains both documents. Both documents are from the FDA’s 26 website. Relator 1 does have the original packaging insert, if needed. The Medication Guide is available at http://www.accessdata.fda.gov/drugsatfda_docs/label/2012/202788s000mg.pdf. The 27 Highlights of Prescribing Information is available at 28 http://www.accessdata.fda.gov/drugsatfda_docs/label/2012/202788s000lbl.pdf. - 13 - Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 15 of 38 Page ID #:34 1 must remain on around-the-clock opioids when taking Subsys. Id. Subsys has an 2 initial dose of 100 mcg and is dosed in single use spray bottles. 1. 3 39. 4 Insys Marketed Subsys for Off-Label Use As discussed in more detail below, Insys actively marketed the off-label 5 use of its drug Subsys, in violation of the FDCA, the Anti-Kickback Statute, the Stark 6 Law, and the FCA. See United States v. King-Vassel, 728 F.3d 707, 709-10 (7th Cir. 7 2013) (“Under the applicable interlocking provisions of the False Claims Act and laws 8 governing Medicaid, the federal Government generally will not pay for medications 9 prescribed for purposes not approved by the FDA.”). Insys facilitated its fraud 10 through its sales representatives as well as by offering free services to prescribing 11 physicians to ensure that their prescriptions cleared the Government’s prior 12 authorization process. a. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 40. Insys Trained Its Sales Representatives to Market Insys for Off-Label Use Insys trained its sales representatives to promote Subsys to physicians for off-label use. Despite Subsys’ indication, which provides, among other things, that it is only for use on cancer patients that are tolerant to other opioids, Insys instructed its sales representatives to “generate market share” for Subsys by targeting and marketing Subsys to physicians whose patients did not have cancer, much less those that were opioid-tolerant. 41. Sales representatives were the core of Insys’ off-label marketing scheme. According to Relator 1, Insys and its most senior executives (who directly took part in training Relator 1 to sell Subsys) did everything they could to ensure that Subsys was marketed and sold off-label. In fact, Defendants’ scheme was so blatant that Relator 1 – throughout the entirety of his employment – never saw any intent or steps taken by Insys senior management to do anything other than market the drug for off-label use.5 5 Even before Relator 1 began his employment, the intent of Insys senior management to promote Subsys off-label was apparent. For example, prior to joining Insys, Relator 1 had no prior 28 experience in pharmaceutical sales. When Burlakoff called Relator 1 to offer him the position with - 14 - Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 16 of 38 Page ID #:35 1 Indeed, the only time Insys senior management purported to demonstrate even the 2 vaguest concern for compliance with the laws prohibiting off-label promotion was 3 during brief, pro-forma, recitations that sales representatives should comply with the 4 law. Of course, at the same time, Defendants did everything they could to make sure 5 sales representatives were trained to do the exact opposite. 42. 6 For example, Insys’ training program for sales representatives was 7 designed solely to promote Subsys’ off-label use to prescribing physicians. First, 8 Insys instructed its sales representatives to avoid marketing to oncologists and instead 9 market to pain management specialists, even though they do not treat cancer patients. 10 According to Relator 1, Insys instructs its sales representatives to avoid working with 11 oncologists because they do not “treat pain,” and therefore targeting them would be 12 far less profitable.6 Rather, Insys told sales representatives to market Subsys to pain 13 management specialists because they would be more likely to prescribe the drug, and 14 to do so in volume. 15 representatives. Insys’ instructions were strictly followed by its sales According to Relator 1, in almost every instance, the pain 16 management specialists targeted by Insys’ sales representatives had no patients with 17 cancer. Indeed, during the course of Relator 1’s employment with Insys – during 18 which he spoke to countless physicians who prescribed Subsys – he never once dealt 19 with a pain management physician that had any patients with cancer. 20 43. Insys’ express focus on pain management physicians that do not treat 21 cancer patients represents a prima facia case of illegal off-label marketing. Because 22 Insys, he stated that the fact that Relator 1 had no prior experience in the pharmaceutical sales industry would allow him to be molded into someone who could “go off-label” much easier. 23 6 During his employment with Insys, Relator 1 informed management that his good friend in 24 Buffalo, NY is the Clinical Director of CCS Oncology, a large cancer treatment center treating all stages of cancer. According to Relator 1, marketing Subsys to his friend would have produced at 25 least twenty new Subsys “writers,” resulting in an expanded market share for Subsys’ indicated use. Insys management, however, rejected Relator 1’s proposition, and instructed him to concentrate on 26 promoting Subsys to physicians that do not treat cancer patients. Upon information and belief, Insys did not want Relator 1 marketing Subsys to his friend, despite the fact that this would have produced 27 several new Subsys writers for its actual indication, because Insys believed Relator 1’s time was 28 better spent furthering its off-label marketing scheme. - 15 - Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 17 of 38 Page ID #:36 1 Subsys is approved only for use on cancer patients with an opioid tolerance, the direct 2 targeting and marketing to doctors that have no cancer patients (and the corresponding 3 instruction not to market to oncologists) can be nothing else. 44. 4 Similarly, Insys repeatedly drilled into its sales representatives the mantra 5 that their main objective was to “generate market share.” According to Relator 1, 6 Insys trained its sales representatives to generate market share by convincing as many 7 physicians as possible to write prescriptions for Subsys, regardless of their patients’ 8 conditions. As a result of its narrow indication, Subsys has a very limited potential 9 customer base. Therefore, by training its sales representatives to target physicians that 10 do not treat cancer patients and promote Subsys for off-label use, Insys sought to 11 generate a larger market share for Subsys than would otherwise be attainable. That is, 12 by enlarging its potential customer base through off-label promotion, Insys also 13 enlarged the market for Subsys beyond the very limited pool of patients with 14 conditions consistent with Subsys’ indication, thereby allowing it to capture a greater 15 market share. 45. 16 To establish the foregoing, Insys provided its sales representatives with a 17 scripted sales pitch as well as sample questions and answers to use when working with 18 physicians. These scripts were designed to steer physicians into prescribing Subsys 19 off-label. Sales representatives practiced their sales pitch in role play training 20 exercises simulating physician interaction with the most senior of Insys management, 21 Insys Vice President of Sales Burlakoff and Chief Executive Officer Babich.7 22 46. The scripted sales pitch – given to pain management specialists – in 23 relevant part, goes as follows: 24 Sales Representative: “I know your time is money, so I’m not looking to 25 waste it. I’ve been directed to deal with a specialist. We have a 26 7 According to Relator 1, Babich regularly attended training sessions where the techniques 27 described herein were covered. In addition, according to Relator 1, Babich personally participated in the role play exercises. 28 - 16 - Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 18 of 38 Page ID #:37 1 boutique drug that deals with your specialty, pain management. It is my 2 understanding that the procedure in treating pain is to establish a 3 baseline?” 4 Physician: “Yes.” 5 Sales Representative: “With that being said, what percentage of your 6 patients have chronic pain?” 7 Physician: “60%” 8 Sales Representative: “This is good. My drug is looking for opioid 9 tolerant patients. What percentage of your patients are experiencing 10 breakthrough pain four times a day and are on other therapy?” 11 Physician: “A few” 12 Sales Representative: “These are the patients my drug wants to address. 13 Oh, and there’s a bonus: we’ll take care of the managed care aspects of 14 your patients [through our Internal Reimbursement Center]. If you’re 15 willing, I would like to go in greater detail over dinner.” 16 47. Significantly, the scripted sales pitch never once mentioned that Subsys 17 was approved only for opioid-tolerant patients with cancer. In fact, according to 18 Relator 1, the only instance where the word “cancer” was actually used during the role 19 play exercises occurred while he was being trained to respond to a physician asking 20 whether Subsys could be prescribed for patients without cancer (discussed below).8 21 And even in such an instance, the word cancer was only uttered for the purpose of 22 training sales representatives to promote Subsys for off-label purposes through 23 allegory. 24 8 Although well-trained to persuade physicians into prescribing Subsy for off-label use, the sales 25 representatives were not always successful. For example, on one occasion, Relator 1 visited a physician on Route 73 to market Subsys. The physician, however, demanded Relator 1 leave his 26 office because he was not an oncologist. Rather, the physician’s specialty was pain management, and he believed that fentanyl was too dangerous for his patients. Moreover, according to Relator 1, 27 this physician actually fired one or two of his staff because they were prescribing fentanyl products against his wishes. 28 - 17 - Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 19 of 38 Page ID #:38 48. 1 That is, as part of the role playing exercises, Insys trained its sales 2 representatives to address the concerns of physicians over prescribing Subsys off3 label. In addressing these concerns, sales representatives were instructed to avoid 4 explicitly stating that the physician should prescribe Subsys for unapproved purposes. 5 Instead, sales representatives were instructed to speak “in code” and to use allegory to 6 communicate the same message. For example, if a physician expressed reservations 7 about prescribing Subsys for patients without cancer, sales representatives were 8 instructed to ask: Sales Representative: “Do you remember 1991? When Duragesic came out?” 9 10 Physician: “Yes.” 11 Sales Representative: “What was that?” 12 Physician: “A fentanyl patch.” 13 14 Sales Representative: “And it was approved for use only in cancer patients, wasn’t it?” 15 Physician: “Yes.” 16 Sales Representative: “Exactly.”9 17 Sales Representative: “How about this? Are you writing prescriptions for those patients for Fentora or Actiq?” 18 Physician: “Yes.” 19 Sales Representative: “Great, our drug has the same indication as those.”10 20 21 9 “Exactly,” of course, meaning that everyone knew that Duragesic was prescribed off-label for a 22 host of uses. In addition, during training, Burlakoff stated about the Durgesic patch “it’s the same molecule as Subsys, [it] just [has a] different delivery method.” 23 10 Again, according to Relator 1, this was the “code” they were supposed to use to encourage 24 physicians to write Subsys for off-label use. The goal was to convince physicians – without expressly saying to write Subsys off-label – that they should do so in the same way that many 25 physicians prescribed Fentora and Actiq for off-label use. According to the Food and Drug Administration’s website, off-label prescribing of Fentora and Actiq is not uncommon. Overview of 26 the May 6, 2008 ALSDAC Meeting to Discuss Supplement 005 to NDA 21-947 for an Expanded Indication for Fentora for Use in Break-Through Pain in Patients with Chronic Pain Not Caused by 27 Malignancy (Apr. 26, 2008), available at http://www.fda.gov/ohrms/dockets/ac/08/briefing/200828 4356b2-01-fda.pdf. - 18 - Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 20 of 38 Page ID #:39 1 49. Insys was well-aware that its marketing practices for Subsys violated the 2 prohibition on off-label marketing. In order to conceal its fraudulent marketing 3 practices, sales representatives were explicitly instructed not to email or text because 4 management did not want internal discussion about the drug’s marketing practices or 5 the Internal Reimbursement Center (“IRC”) (discussed below) written down. Rather, 6 all communications had to first go to the sales representatives’ Regional Sales 7 Manager (“RSM”), who would then speak directly with Burlakoff. b. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 50. Insys Used and Marketed its IRC to Promote Subsys Off-Label Use Insys also created its IRC to promote Subsys for off-label use to physicians. The IRC ostensibly exists to assist physicians with obtaining prior authorization for Subsys prescriptions from their patients’ insurers and Medicare/Medicaid. In reality, however, the IRC existed to make it easier for physicians to prescribe Subsys for off-label use by virtually guaranteeing that Subsys prescriptions for patients without cancer would receive authorization. Moreover, if the IRC could not immediately obtain authorization for a patient’s Subsys prescription, Insys guaranteed to provide free Subsys to the patient until it could obtain approval. All of the services just mentioned are provided by Insys as part of a marketing ploy to encourage physicians to prescribe Subsys for off-label use by addressing the concerns of physicians writing these prescriptions. 51. To provide some background, prior authorization is a feature provided by insurers and Medicare/Medicaid to ensure that certain drugs are prescribed appropriately. Prior authorization helps to ensure that these drugs are used correctly and only when necessary. In other words, insurers and Medicare/Medicaid require prior authorizations to prevent improper prescribing or use of certain drugs that may not be the best choice for a particular health condition. When a patient brings a prescription which requires prior authorization to the pharmacy to be filled, the pharmacist is notified that prior authorization is required. The pharmacist will then - 19 - Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 21 of 38 Page ID #:40 1 contact the patient’s physician, who contacts the insurer to submit additional 2 information, typically in the form of a letter of medical necessity (“LMN”) for the 3 prescription. The insurer will then either grant authorization, and pay for the 4 prescription, or deny authorization, in which case the physician can either appeal the 5 insurer’s decision or prescribe a different medication. Typically, when a patient is 6 prescribed a medication for its indicated use, obtaining prior authorization is relatively 7 simple. When a physician prescribes a medication for off-label use, however, 8 obtaining prior authorization can be much more difficult. 52. 9 The IRC is utilized by Insys as a marketing ploy to encourage physicians 10 to prescribe Subsys for off-label purposes. Although Insys purportedly used the IRC 11 to assist physicians in obtaining prior authorization for Subsys prescriptions, in reality, 12 the IRC existed to assist physicians writing off-label Subsys prescriptions. This is 13 demonstrated by the two main incentives the IRC provides to physicians: (1) the IRC 14 guaranteed that patients without cancer would obtain prior authorization for Subsys 15 prescriptions that should have been denied (or Insys would provide the drug, itself, for 16 free); and (2) the IRC relieved physicians from having to perform the administrative 17 responsibilities associated with obtaining prior authorization for Subsys prescriptions. 53. 18 First, by guaranteeing prior authorization for Subsys prescriptions, the 19 IRC was able to significantly mitigate a major concern of physicians considering 20 prescribing Subsys off-label. According to Relator 1, Insys instructed its sales 21 representatives that their ultimate goal was to convince physicians to opt-in to the 22 IRC program. In order to opt-in, a physician would fill out an IRC request form.11 23 The IRC request form incorporated a prescriptions box, which the physician would fill 24 out with the patient information, and then send it to the IRC. Then, the IRC would use 25 that form and obtain authorization for the Subsys prescription from the patient’s 26 insurer or Medicare/Medicaid. According to Relator 1, Insys instructed IRC staff 27 11 28 Attached as Ex. 2 is a copy of the IRC request form. - 20 - Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 22 of 38 Page ID #:41 1 handling IRC requests to obtain approval for a 800 mcg/dose, despite the fact that 2 physicians typically wrote prescriptions for 100 mcg/dose, Subsys’ initial dosage. By 3 doing this, IRC would not have to go back to obtain approvals for subsequent 4 prescriptions. The IRC would also handle all appeals if the initial request for prior 5 authorization was denied. In addition, after a physician opted in, all future 6 prescriptions for Subsys were directed to IRC, not a local pharmacy. Thus, through its 7 handling of subsequent off-label Subsys prescriptions, Insys was able to assure 8 physicians that not only would the initial Subsys prescription receive prior 9 authorization, but so too would all subsequent prescriptions. 10 54. Using a variety of techniques, Insys was able to ensure that virtually 11 every off-label Subsys prescription received prior authorization. For example, 12 according to Relator 1, one way IRC staff obtained prior authorization was through 13 their relationships with the individuals making prior authorization determinations for 14 the insurers and Medicare or Medicaid. Moreover, in instances where IRC’s 15 connections were of no utility, IRC staff would, as a matter of course, say whatever 16 was necessary to receive prior authorization. For example, IRC employees would 17 regularly say things along the lines of “the patient can’t” or “has severe difficulty 18 swallowing oral medications,” even though nothing resembling such a diagnosis was 19 contained in the cover letter from the doctor’s office. Other examples of IRC staff 20 falsifying patient conditions to obtain approval for Subsys include the following: 21 “Patient is unable to digest oral medications”; “patient suffers from almost constant 22 severe pain”; “patient’s pain limits his or her quality of life”; “patient is unable to 23 participate in normal life (sit, stand, reach, walk, ride in cars) because of the pain.” 24 All of the patient conditions just mentioned were scripted and completely falsified by 25 IRC staff – at the direction of Insys senior management – for the sole purpose of 26 fraudulently obtaining prior authorization for off-label Subsy prescriptions. See Ex. 3 27 (sample letter with the foregoing already written and “fill in the blanks” spaces for 28 patient name). - 21 - Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 23 of 38 Page ID #:42 1 55. In addition, during Relator 1’s training, he was brought to the IRC to 2 observe how they obtain prior authorizations for sales representatives in the field. 3 While visiting the IRC, Relator 1 heard Kim Fordham (“Fordham”) state that the 4 patient she was attempting to obtain prior authorization for was having difficulty 5 swallowing oral medications, despite the fact that this diagnosis was not contained in 6 the cover letter from the prescribing physician. It was during this visit that Fordham 7 informed Relator 1 that the IRC regularly obtains authorization through its numerous 8 connections at various insurance companies, and if these connections do not result in 9 obtaining prior authorization “they know what to say to get the scripts approved.” 10 56. The IRC was a resounding success. According to Relator 1, the IRC 11 obtained prior authorization for Subsys 70% of the time on the first request – even 12 though the majority of those prescriptions were for patients who did not have cancer. 13 Moreover, Relator 1 does not know of a single instance where a prior authorization 14 request was handled by the IRC and not eventually approved. 15 57. Insys trained its sales representatives to make the IRC’s success rate at 16 obtaining prior authorization a major point of emphasis when promoting Subsys to 17 physicians. For example, sales representatives were provided with sample questions 18 and answers addressing physicians’ concerns regarding obtaining patient approval for 19 off-label use. For example, the following is a scripted question and answer provided 20 to Relator 1 during training: “Physician Question: ‘Isn’t fentanyl hard to get approved 21 for a non-cancer use? I’ll just keep writing “short acting” opiates [like Oxy, 22 Hydrocodone, Hydromorphone] instead.’ Sales Representative Response: ‘We take 23 care of that through our IRC. We can get prior authorizations for you and take care of 24 everything. We have a 70% pull through rate [approval rate] the first time.’” 25 58. In addition to the above, Insys guaranteed, and touted that guarantee, to 26 physicians that, if for some reason prior authorization could not be immediately 27 obtained, Insys would provide the patient with free Subsys until authorization could 28 - 22 - Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 24 of 38 Page ID #:43 1 be obtained.12 This was no small perk: a thirty-day supply of Subsys cost 2 approximately $10,000. 3 59. The second benefit the IRC provided to physicians writing off-label 4 prescriptions for Subsys was that the IRC, rather than the physician, undertakes a 5 majority of the administrative tasks associated with obtaining prior authorizations for 6 Subsys prescriptions. In addition to the uncertainty of whether the off-label 7 prescriptions will receive prior authorization, physicians might also refrain from 8 prescribing Subsys off-label because of the exhaustive administrative requirements 9 associated with obtaining prior authorization. According to Relator 1’s training 10 materials, the administrative responsibilities associated with obtaining patient 11 approvals can be very time consuming.13 Thus, physicians might be deterred from 12 prescribing Subsys to patients without cancer because of the hassle associated with 13 obtaining prior authorizations. Therefore, by handling the administrative 14 responsibilities, Insys has removed yet another possible roadblock to a physician’s 15 decision to prescribe Subsys to patients without cancer. 16 60. The services provided to physicians by the IRC and the guarantee to 17 provide free Subsys if authorization cannot be obtained further demonstrate that Insys 18 intended to and did in fact promote Subsys for off-label use. First, the IRC’s ability to 19 obtain prior authorization in virtually every instance and Insys’ guarantee would 20 provide no value to physicians prescribing Subsys for its indicated use. Recognizing 21 that the uncertainty regarding a patient’s ability to access Subsys could be a major 22 deterrent to physicians considering prescribing Subsys off-label, Insys offered the 23 IRC’s expertise in obtaining prior authorization and guarantee of free product if 24 authorization could not be obtained. To a physician prescribing Subsys for its 25 indicated use, however, these services would be of little or no value, and therefore 26 27 12 Attached as Ex. 4 is a copy of Relator 1’s training material discussing Insys’ guarantee to provide free Subsys if prior authorization could not be obtained. 13 28 Attached as Ex. 5 is a copy of Relator 1’s training material discussing the foregoing. - 23 - Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 25 of 38 Page ID #:44 1 unnecessary. In such an instance, the ability to obtain prior authorization for Subsys 2 prescriptions (or to deal with administrative appeals) would not be a concern to a 3 physician prescribing Subsys for its indicated use because Medicare/Medicaid would 4 not deny prescriptions written for opioid-tolerant patients who had cancer. 61. 5 Not surprisingly, the IRC was very popular with physicians – so 6 successful that virtually all of the physicians writing off-label Subsys prescriptions 7 utilized the IRC. Indeed, according to Relator 1, approximately 80-90% of patients 8 prescribed Subys did not have cancer, and virtually all of those patients obtained prior 9 authorization through the IRC because without IRC’s expertise prior authorization 10 would not have been possible. In fact, Relator 1 is aware of just one physician who 11 was able to obtain prior authorization for Subsys without the use of the IRC, and that 12 was for a patient who had cancer. c. 13 14 62. 15 Insys Provided Physicians With A “Canned” Letter of Medical Necessity to Encourage Physicians to Prescribe Subsys Off-Label To provide prescribing physicians with further assurance in its ability to 16 receive prior authorization for off-label Subsys prescriptions, Insys provided its sales 17 representatives and other staff with a standardized “canned” LMN to be distributed to 18 prescribing physicians.14 As stated above, when an insurer or Medicare/Medicaid 19 requires prior authorization before it will pay for a prescription drug, the prescribing 20 physician typically submits an LMN outlining why the drug is medically necessary for 21 the patient’s treatment. Obviously, these letters must be patient specific, as the letter 22 is meant to establish that a particular drug is medically necessary for a particular 23 patient. 24 63. According to Relator 1, the form LMN contained the “magic language” 25 to obtain patient approvals. The form LMN is not patient specific, and requires only 26 14 In June 2013, Insys emailed a copy of the form LMN to all sales representatives and associated 27 personnel. Attached as Ex. 6 is the email distributed by Insys. The LMN is previously identified at Ex. 3. 28 - 24 - Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 26 of 38 Page ID #:45 1 that physicians fill in the blanks and submit the form.15 In fact, the falsified patient 2 conditions mentioned above which IRC staff used to obtain prior authorization were 3 also included in Insys’ form LMN. 4 64. As with the use of the IRC, Defendants’ fraudulent intent is demonstrated 5 by the “canned” LMN because such a letter would be unnecessary if Subsys was 6 written for its indicated use. A physician seeking prior authorization for Subsys’ 7 approved use would not need “magic language” – he or she would only need to write 8 the actual patient symptoms, mainly that the patient was opioid-tolerant and has 9 breakthrough pain caused by cancer. d. 10 11 12 13 14 15 16 17 18 19 20 65. Defendants’ promotion of Subsys for off-label use increases the health risk to patients receiving these prescriptions. Fentanyl, the opioid analgesic in Subsys, is a very powerful pain management medication (which is why it is only indicated for use on cancer patients). Indeed, according to the Department of Justice, “Fentanyl is 100 times more potent than morphine as an analgesic.”16 Fentanly’s strength has been demonstrated recently by the increasing number of drug overdose deaths involving Fentanyl. In addition, according to the U.S. Center for Disease Control and Prevention, the people “who are most at risk for overdose” include those people “who take high daily dosages of prescription painkillers[.]”17 66. 21 22 Defendants Increase the Health Risk to Patients by Promoting Subsys for Off-Label Use Prescribing very strong pain medication can also lead to opioid 15 For example, one sentence in the form LMN reads “While I am aware of the risks associated with this class of medications, SUBSYS is necessary for (said patient) to effectively treat the onset 23 and duration of their breakthrough pain episodes.” The form LMN also includes other patient specific references, such as “[i]njectable pain relievers are not an option for this patient.” Indeed, 24 providing such a letter is even contrary to Subsys’ website’s prior authorization support page, which states “Healthcare providers are responsible for providing any medical necessity justifications.” 25 16 Drug & Chemical Evaluation Section, Department of Justice, Drug Enforcement Administration, 26 available at http://www.deadiversion.usdoj.gov/drug_chem_info/fentanyl.pdf. 27 17 Policy Impact: Prescription Painkiller Overdoses, Centers For Disease Control and Prevention, 28 available at http://www.cdc.gov/homeandrecreationalsafety/rxbrief/. - 25 - Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 27 of 38 Page ID #:46 1 dependence and addiction. Opioid dependence can occur when an individual’s pain 2 management treatment involves prescription opioid pain medication. As a result of 3 taking this medication, an individual can become physically dependent on opioids – if 4 the drug is stopped, they will suffer from withdraw syndrome. Moreover, it is well 5 documented that opioid addiction is a serious problem. These powerful drugs can 6 create a feeling of euphoria, cause physical dependence and, in some people lead to 7 addiction. The chance that a patient will become physically dependent on opioids or 8 addicted is increased when the patient is prescribed stronger pain medication than is 9 medically necessary. 10 67. Insys’ promotion of Subsys for off-label purposes has resulted in an 11 increased risk of overdose and opioid dependence and/or addiction in patients 12 receiving the drug. Due to Insys’ off-label marketing scheme for Subsys, patients 13 prescribed the drug are receiving stronger pain medication than is medically necessary 14 – patients without cancer are receiving pain medication for use in cancer patients. As 15 a result, these patients are at an increased risk of overdosing, and becoming opiod 16 dependent and/or addicted. Insys has created this increased risk to Subsys users, in 17 the name of profit, by encouraging physicians to prescribe Subsys when such a 18 powerful drug is not medically necessary to treat patients’ conditions. e. 19 20 21 68. Claims Submitted to Government Health Care Programs for Off-Label Uses Were Not Covered The claims submitted to Government health care programs for off-label 22 Subsys prescriptions were false because the prescriptions were not properly covered. 23 As a precondition to payment, healthcare providers are required to verify on Form 24 HCFA-1500 that the prescriptions and services they provide are “medically indicated 25 and necessary for the health of the patient.” As shown, above, the prescriptions that 26 Defendants were inducing physicians to write were neither medically indicated nor 27 necessary. Rather, they were expressly for off-label and improper uses, and violated 28 the FCA. - 26 - Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 28 of 38 Page ID #:47 1 69. In the Medicaid Program, States will not receive FFP if a drug, as 2 prescribed, is not for a medically acceptable use. FFP is available to States only for 3 “covered outpatient drugs.” 42 U.S.C. §1396b(i)(10). As a result, States’ own laws 4 and pharmacy regulations require the drugs to be used for a medically accepted use, 5 and therefore fit the definition of a covered outpatient drug. 6 70. “Covered outpatient drugs” do not include drugs that are “used for a 7 medical indication which is not a medically accepted indication.” 42 U.S.C. §1396r8 8(k)(3). A medically accepted indication is defined as a use “which is approved under 9 the [FDCA]” or which is “supported by one or more citations included or approved for 10 inclusion” in specified drug compendia. 42 U.S.C. §1396r-8(k)(6). 42 U.S.C. §1396r11 8(g)(1)(B)(I) identifies the compendia to be consulted: American Hospital Formulary 12 Service Drug Information; United States Pharmaeopeia-Drug Information; and the 13 DRUGDEX information System (collectively, the “Drug Compendia”). 14 71. Medicare Part A generally pays the inpatient services for eligible 15 beneficiaries in hospital, hospice and skilled nursing facilities, as well as some home 16 healthcare services. 42 U.S.C. §§1395e-1395i-5. Prescription drugs are covered 17 under Medicare Part A only if they are administered on an inpatient basis in a hospital 18 or similar setting, and are “reasonable and necessary.” 19 72. Medicare Part B pays for some types of prescription drugs that are not 20 administered in a hospital setting, and that are “reasonable and necessary.” 42 U.S.C. 21 §§1395k(a), 1395x(s)(2); 42 C.F.R. §405.517. These typically include drugs 22 administered by a physician or other provider in an outpatient setting, some orally 23 administered anticancer drugs and antiemetics (drugs which control the side effects 24 caused by chemotherapy), and drugs administered through durable medical equipment 25 such as a nebulizer. 42 U.S.C. §§1395k(a), 1395x(s)(2); 42 C.F.R. §405.517. 26 73. The Medicare program Part D drug benefit covers all drugs that are 27 considered “covered outpatient drugs” under 42 U.S.C. §1396r-8(k). 28 74. The off-label uses alleged herein are not supported by “clinical research - 27 - Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 29 of 38 Page ID #:48 1 that appears in peer-reviewed medical literature,” and could not, under any 2 circumstances, be determined to be “medically accepted as safe and effective” or 3 “reasonable and necessary” for such uses. Claims for such off-label uses were 4 therefore not covered by Medicare either. 5 75. Insys was aware that the natural and probable consequence of its 6 promotion of off-label uses of Subsys was that health care providers would submit 7 claims for payment to Government Healthcare Programs for the off-label use. 8 Notwithstanding this knowledge, Insys vigorously promoted these off-label uses. 9 Insys was also aware that its illegal promotion did in fact result in false claims to these 10 and other Government payors for the off-label uses. Moreover, Insys was aware that 11 its promotion activities was a substantial factor in producing the claims. 12 76. When pharmacies, physicians and other healthcare providers submitted 13 claims based upon a physician’s prescription for Subsys for off-label uses, the claims 14 they submitted were false because such off-label uses were not supported by a citation 15 in one of the Drug Compendia specified by 42 U.S.C. §1396r-8(g)(1)(B)(1) 16 (Medicaid), not supported by “clinical research that appears in peer-reviewed medical 17 literature,” and could not, under any circumstances, be determined to he “medically 18 accepted generally as safe and effective” or “reasonable and necessary” (Medicare). 19 77. False claims to these Government health care programs for off-label 20 prescribing was the direct and proximate result of unlawful off-label marketing efforts 21 by Insys. Therefore, Insys caused the submission of these claims. Insys caused the 22 submission of false claims, since healthcare providers submitted Pharmacy Claim 23 Forms and CMS 1500 Form to Government Healthcare Programs, and the States 24 submitted Form CMS-64 to the Federal Government, all claiming reimbursement for 25 Subsys for such off-label uses. 2. 26 27 28 78. Insys Illegally Paid Kickbacks in Exchange for Promotion and Prescription of Subsys In an attempt to increase its market share, Insys also paid illegal - 28 - Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 30 of 38 Page ID #:49 1 kickbacks to physicians to induce them to write Subsys prescriptions that were 2 reimbursed through federal health care programs. As a front for its kickback 3 arrangement, Insys conducted speaker programs that were actually vehicles for paying 4 kickbacks to physicians under the guise of honoraria. These financial benefits were 5 offered with the explicit understanding that in exchange, the physicians would 6 preferentially prescribe or indicate the use of Subsys to its patients. 7 79. Through Insys’ speaker program, physician speakers were paid to speak 8 at local and national events to educate other doctors and health care professionals 9 about Subsys. In practice, however, Insys’ speaker program exists to induce 10 physicians to both begin prescribing Subsys and to increase the quantity of Subsys 11 prescriptions they write. 12 80. According to Relator 1, the criteria used to determine the amount of 13 compensation a physician received for speaking at events depended solely upon the 14 volume of Subsys prescriptions he or she had written. To induce the foregoing, Insys 15 created two tiers of compensation for physicians hired as speakers. Whether a 16 physician is compensated at the higher tier depended on how many Subsys 17 prescriptions he or she has written. The highest (or first level) tier of compensation 18 was for physicians deemed “national speakers.” National speakers would speak at 19 conferences and meetings across the country. Insys selected its “top writers” of 20 Subsys prescriptions for national speaker positions. The lower (or second level) tier 21 of compensation is for physicians deemed “local speakers.” Local speaker positions 22 were provided to physicians writing a significant amount of Subsys prescriptions, but 23 not as many as national speakers. 24 81. The qualifications of the physicians hired by Insys as speakers 25 demonstrate that its speaker program was nothing more than a mechanism to facilitate 26 kickbacks in return for writing Subsys prescriptions. As Subsys’ indicated use is for 27 cancer patients, it would be reasonable to expect that the physicians Insys selected to 28 educate and inform other physicians and health care professionals about the drug - 29 - Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 31 of 38 Page ID #:50 1 would be oncologists, or otherwise have at least some level of expertise in dealing 2 with cancer patients. And yet, Insys did not condition its selection of speakers on 3 whether they had a pedigree that included cancer treatment. Instead, Insys focused 4 solely on those physicians who wrote the most prescriptions for Subsys. 5 82. In addition, Insys passed over physicians far more qualified than the 6 physicians selected for speaker positions. For example, physicians who did not 7 prescribe as much Subsys would not be selected as speakers, even though they had the 8 same (or greater) qualifications than those selected. 9 83. Insys promoted the fruits of being selected as speakers at its conferences 10 through its sales representatives. As part of their training, sales representatives were 11 provided with different physician “personality” types that they would encounter when 12 promoting Subsys. Each personality type was given a corresponding color. Then, 13 using the different physician personality types, Insys trained its sales representatives 14 to identify which physician personality type to offer speaker positions to and which 15 personality types to avoid. For example, physicians categorized as “Yellow” were 16 described as an “amiable doctor,” but not the best customer. Sales representatives 17 were instructed not to offer speaker positions to Yellow physicians, regardless of their 18 personality or qualifications (the two main reasons to exclude a physician from a 19 potential speaker position). “Red” physicians were described “fast moving.” Insys 20 trained its sales representatives to show them headlines and avoid wasting their time. 21 Sales representatives were further instructed that Red physicians presented a business 22 opportunity and therefore these physicians were to be offered speaker positions. 23 There is no explanation for Insys’ method of identifying physicians for speaker 24 positions based on personality type (and not their actual personality or credentials) 25 other than that Insys, based on its experience in the drug manufacturing and promotion 26 industry, targeted these physicians because it believed they were the most likely to 27 write the most Subsys prescriptions in return for speaker positions. 28 84. Insys also used the speaker program to encourage physicians currently - 30 - Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 32 of 38 Page ID #:51 1 writing Subsys prescriptions to increase the number of Subsys prescriptions they were 2 writing. The speaker positions offered by Insys were highly coveted. And it was no 3 secret that the key to landing these speaker positions was to increase the amount of 4 Subsys prescriptions written. Thus, it was explicitly understood by physicians that 5 these speaker positions were given to physicians in exchange for writing a significant 6 amount of Subsys prescriptions. For example, according to Relator 1, he was once 7 approached by Dr. Manish Singh, a Neurology and Pain Management physician 8 prescribing Subsys to his patients. Dr. Singh stated that “I want more dinners and to 9 do speaking programs.” Relator 1 relayed Dr. Singh’s request to his RSM, who said 10 “no” to Dr. Singh’s request because “he was not writing enough prescriptions [for 11 Subsys].” 85. 12 Both the pharmaceutical industry and Insys have recognized the potential 13 for abuse of “educational” speaker programs. Contained in Insys’ training module for 14 sales representatives is a section entitled “Compliance.” This section contains the 15 Pharmaceutical Research and Manufacturers of America’s (“PhRMA”)18 Code on 16 Interactions with Health care Professionals (the “Code”) issued in 2004 and reissued 17 in 2009.19 Within the PhRMA Code (and therefore within Insys training module) is a 18 section entitled “Speaker Programs and Speaker Training Meetings.” This section 19 provides, in part, that: 20 Healthcare professionals participate in company-sponsored speaker 21 programs in order to help educate and inform other healthcare 22 23 18 Insys, along with other major pharmaceutical companies, is a member of PhRMA, a signatory to 24 the Code and has announced its intention to abide by the Code. The PhRMA Code provides that “[i]nteractions” between pharmaceutical company employees and health care professionals should 25 be focused on informing healthcare professionals about products, providing scientific and educational information, and supporting medical education.” In addition, Insys has expressly 26 certified that it is in compliance with the Code. 27 19 The PhRMA Code is available 28 at: pdf/phrma_marketing_code_2008.pdf. - 31 - http://www.phrma.org/sites/default/files/ Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 33 of 38 Page ID #:52 1 professionals about the benefits, risks and appropriate uses of company 2 medicines. 3 Any healthcare professional engaged by a company to participate in such 4 external promotional programs on behalf of the company will be deemed 5 a speaker for purposes of this Code, and the requirements of Section 7 6 apply to company interactions with that healthcare professional in his or 7 her capacity as a speaker. Company decisions regarding the selection or 8 retention of healthcare professionals as speakers should be made based 9 on defined criteria such as general medical expertise and reputation, 10 knowledge and experience regarding a particular therapeutic area, and 11 communications skills. Companies should continue to ensure that 12 speaking arrangements are neither inducements nor rewards for 13 prescribing a particular medicine or course of treatment. 14 86. Despite Insys’ recognition that its speaker program could be used to 15 influence the decision making of physicians, Insys disregarded the illegality of such 16 practices. 17 COUNT I 18 (False Claims Act 31 U.S.C. §3729(a)) 19 87. Relators repeat each allegation in each of the proceeding paragraphs of 20 this Complaint with the same force and effect as if set forth herein. 21 88. As described above, Defendants have submitted and/or caused to be 22 submitted false or fraudulent claims to Medicare by engaging in an unlawful kickback 23 scheme and off-label marketing in connection with its drug Subsys that was intended 24 to and did in fact induce physicians to improperly prescribe Subsys. These 25 prescriptions were reimbursed by federal health care programs, including Medicare 26 and Medicaid, and therefore were issued in violation of both the Anti-Kickback 27 Statute and the FCA. As a result, the federal Government has been defrauded and 28 suffered a substantial loss. - 32 - Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 34 of 38 Page ID #:53 1 89. By virtue of the acts described above, Defendants have violated: (1) 2 31 U.S.C. §3729(a)(1)(A) by knowingly presenting, or 3 causing to be presented, false or fraudulent claims for payment or 4 approval; and/or 5 (2) 31 U.S.C. §3729(a)(1)(B) by knowingly making, using, or 6 causing to be made or used, a false record or statement material to a false 7 or fraudulent claim; and/or (3) 8 31 U.S.C. §3729(a)(1)(G) by knowingly making, using, or 9 causing to be made or used, a false record or statement material to an 10 obligation to pay or transit money or property to the Government, or 11 knowingly concealing or knowingly and improperly avoiding or 12 decreasing an obligation to pay or transmit money or property to the 13 Government. 14 90. To the extent any of the conduct alleged herein occurred on or before 15 May 20, 2009, Relators reallege that Defendants knowingly violated 31 U.S.C. 16 §3729(a)(1); 31 U.S.C. §3729(a)(2); and 31 U.S.C. §3729(a)(7) prior to amendment, 17 by engaging in the above-described conduct. 18 91. By reason of the foregoing, the United States has suffered actual damages 19 and is entitle to recover treble damages plus a civil monetary penalty for each false 20 claim. JURY TRIAL DEMANDED 21 22 Relators demand a jury trial. PRAYER FOR RELIEF 23 24 WHEREFORE, Relators pray that the Court enter judgment against Defendants 25 as follows: 26 A. that the United States be awarded damages in the amount of three times 27 the damages sustained by the United States because of the false claims alleged within 28 this Complaint, as the Federal False Claims Act, 31 U.S.C. §§3729 et seq. provides; - 33 - Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 35 of 38 Page ID #:54 1 B. that civil penalties of$11,000 be imposed for each and every false claim 2 that Defendants caused to be presented to the United States and/or its grantees, and for 3 each false record or statement that Defendants made, used, or caused to be made or 4 used that was material to a false or fraudulent claim; 5 C. that attorneys' fees, costs, and expenses that Relators necessarily incurred 6 in bringing and pressing this case be awarded; 7 D. that Relators be awarded the maximum amount allowed to them pursuant 8 to the False Claims Act; and 9 E. that this Court order such other and further relief as it deems proper. 10 DATED: May 6, 2014 Respectfully submitted, 11 12 THE WEISER LAW FIRM, P.C. KATHLEEN A. HERKENHOFF (168562) 13 14 15 16 17 18 19 12707 High Bluff Drive, Suite 200 San Diego, CA 92130 Telephone: (858) 794-1441 Facsimile: (858) 794-1450 kah@weiserlawfirm.com 26 Robert B. Weiser Christopher L. Nelson James M. Picaro Ross M. Wolfe 22 Cassatt A venue Berwyn,PA 19312 Telephone: (610) 225-2677 Facsimile: (610) 225-2678 cln@weiserlawfirm.com jmf@weiserlawfirm.com rmw@weiserlawfirm.com 27 Attorneys for Qui Tam Plaintiffs 20 21 22 23 24 25 28 - 34 - Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 36 of 38 Page ID #:55 UNITEDSTATESDISTRICTCOURT,CENTML DISTRICT OFCALIFORNIA CIVILCOVER5H!aET 1.(a} PLAINTIFFS ( Checkbox if you are representing yourself DEFENDAtlTS ( Check.boxif you are representing >" yourself D d UNITEDSTATES OFAMERICA. exrel.,JOHNDOE and ABC,LLC {b) County of Residence of First Listed Plaint iff ___ ) lNSYSTHERAPEUTICS, INC,ALECBURLAKOFand F MICH AELL BABICH ____ County of Residence of ~irst Listed Defen dant (EXCEPT IN U.S.PLAINTIFF CASES) (IN U.S.PLAINTIFF CASEONLY S )- (c) Attorneys {FirmName,Addressand Telephone Number)·1fyou are representing yourself, provide the sameInform ation. Maricopa Cnty AZ Attorneys (FirmName,Addressand Telephone Number) If you are representing yourself, provide the same inform ation. Kathleen A. Herkenhoff, The WeiserLawFirm, P.C.,12707 High Bluff Drive,Suite 200, San Diego,CA 92130. Telephone: (858)794-14 41. 11.SASISOF JURISDICTION(Placean XIn one box only.) HI.CITIZENSHIPOf Pfltr'iCIPAL PART orOiversityCases Only (Placean Xin one box for plaintiffand IES-F one for defendant) .. D 3. FederalQuestion (U.S. [8) 1. U.S.Government Plaintiff D 2. U.S.Government D 4. Diversity (Indicate Citizenship Defendant of Parties in Item 111) IV. ORIGIN {Placean X in one box only~) l'v1 1. Original Proceeding ~ O 2. Removedfrom Appellate Court V. REQUESTEDIN COMPL~mm JURYDEMAND CiJ',SS ACTIOf\} under f.R.Cv.P. 23: : lg] Yes • Yes VII. NATUREOF SUIT(Placean X in one box ~ 375 D D D Reapportionment 41 O Antitrust 430 Banksand Banking • 450 Commerce/ICC O 460 Deportation Rates/Etc. 0 470 Racketeerlnfluenced & Corrupt Org. D 480 Consumer Credit 0 490 Cable/SatTV • • 850 Securities/Commodities/Exchange 890 Other Statutory O Actions 891 AgriculturalActs O 893 Environmental Matters 895 Freedom of Info. Act • O D D D O False ClaimsAct 400 State 896 Arbitration 899 Admin. Procedures Act/RevieW?~Appealof Agency Dec1s1on 950 Constitutionalityof State Statutes FOROFFICEUSEONLY: CV-71 (1 t/13) D 130Miller Act • D D 140 Negotiable Instrument 150 Recoveryof Overpayment & D Enforcementof 151MedicareAct 152 Recoveryof Defaulted Student Loan (Exel.Vet.} 153Recoveryof overpayment of Vet.Benefits 195 Product Liability 196Franchise ~ ll£1\fflO~ L D 210Land D D Condemnation 220 Foreclosure 230 Rent Lease& E"ectment 4. Reinstatedor Reopened O No O 5. Transferredfrom Another District (Specify) _ D 6 • er · D 4 5 ~4 0 5 ~~;~~t Litigation (Check•Yes"only if demanded in complaint.) O MONEY DEMfi.NDEDIN COMPL.Ali\ff:$ which you are filingand write a brief statement of cause. Do not cite Jurisdictional statutes unless diversity.} 240 Torts to land 245 Tort Product Liability 290 All Other Real •. D 462 Naturalization Application 465 Other lmmi ration Actions Ht.bMs Corpl!S: O O • D 820 Copyrights 463 AlienDetainee S l OMotions to Vacate Sentence 530 ;._--1 General it· · l'X: -If the United States,or one of its agenciesor employees,is a party, is It: its agenciesor employees,a party to this .... ;·~~/-~I;.,.:,r-.;, action? : ·. , A PLAINTIFF? A DEFENDANT7 ', .. .. INITIALDIVISIONIN CACOIS: ·,~--- ~.-9.'.,, ...~ .. -+ •,r ' INITIALDIVISIONIN CACD Western Division CIVIL COVERSHEET Pagel of3 !~ Case 2:14-cv-03488-JLS-AJW Document 1 Filed 05/06/14 Page 38 of 38 Page ID #:57 UNITED STATESDISTRICTCOURT,CENTRALDISTRICTOF CALIFORNIA CIVILCOVERSHEET IX(a). IDENTICALCASES:Has this action been previously filed in thiscourtand dismissed, remanded or closed? IB:JNO 0 YES IB:JNO 0 YES If yes, list case number(s): IX(b). RELATEDCASES:Have any cases been previously filed inthiscourtthat are related to the present case? If yes, list case number(s): Civil casesare deemed related if a previouslyfiled caseand the presentcase: (Check all boxes that apply) D A. Arise from the same or closely related transactions, happenings, or events; or D B. Call for determination of the same or substantially related or similar questions of law and fact; or D C. For other reasons would entail substantial duplication of labor if heard by different judges; or D D. Involve the same patent, trademark or copyright. and one of the factors identified above in a, b or c also is present. X. SIGNATUREOF ATTORNEY (OR SELF-REPRESENTED LITIGANT): DATE: 5/6/2014 Notice to Counsel/Parties:The CV-71 (JS-44)Civil Cover Sheet and the information contained herein neit ~ •~JM •enor supplement the filing and service of pleadings or other papers as required by law. This form, approved by the Judicial Conference of the United States in September 1974, Is required pursuant to Local Rule 3-1 is not filed but is used by the Clerk of the Court for the purpose of statistics, venue and initiating the civil docket sheet. (For more detailed instructions, see separate instructions sheet). Key to Statistical codes relating to Social Security Cases: Nature of Suit Code Abbreviation SubstantiveStatement of Causeof Adion All claims for health insurance benefits (Medicare) under Title 18, Part A, of the Social Security Act, as amended. Also, include claims by hospitals, skilled nursing facilities, etc., for certification as providers of services under the program. (42 U.S.C.1935FF(b)) 861 HIA 862 BL 863 DIWC All claims filed by insured workers for disability insurance benefits under Title 2 of the Social Security Act, as amended; plus all claims filed for child's insurance benefits based on disability. (42 U.S.C.405 (g)) 863 DIWW All claims filed for widows or widowers insurance benefits based on disability under Title 2 of the Social Security Act, as amended. (42 U.S.C.405 (g)) 864 SSID All claims for supplemental security income payments based upon disability filed under Title 16 of the Social Security Act, as amended. 865 RSI CV-71 (11 /13) All claims for "Black Lung" benefits under Title 4, Part B, of the Federal Coal Mine Health and Safety Act of 1969. (30 U.S.C. 923) All claims for retirement (old age) and survivors benefits under Title 2 of the Social Security Act, as amended. (42 405 (g)) u.s.c. CIVIL COVERSHEET Page3 of3