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Criminal RICO, Fighting Corruption and Fraud in Big Pharma - United States v. Michael L. Babich
Published online by Cambridge University Press: 06 January 2021
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- Copyright © American Society of Law, Medicine and Ethics and Boston University 2019
References
1 See Indictment, United States v. Michael L. Babich, et al., 1:16-cr-10343-ADB, at 6-7 (D. Mass. Dec. 6, 2016).
2 Id.
3 Id. at 7.
4 Controlled Substances Act, 21 U.S.C. §§ 801-971 (1970); Id. at 8.
5 Drug Enforcement Administration, Drugs of Abuse: A DEA Resource Guide (2017 ed.).
6 See Indictment, supra note 1, at 6-7. The indictment charged Michael L. Babich (former CEO and President of Insys), Alec Burlakoff (former VP of Sales), Richard M. Simon (former National Director of Sales), Sunrise Lee (former Regional Sales Director), Joseph A. Rowan (former Regional Sales Director), and Michael J. Gurry (former Vice President of Managed Markets). On October 24, 2017, the first superseding indictment added John N. Kapoor (founder of Insys). See First Superseding Indictment, United States v. Michael L. Babich, et al., 1:16-cr-10343-ADB (D. Mass. Oct. 24, 2017).
7 Press Release, Pharmaceutical Executives Charged in Racketeering Scheme, U.S. Attorney's Office for the District of Massachusetts (Dec. 8, 2016).
8 See Indictment, United States v. Michael L. Babich, et al., 1:16-cr-10343-ADB, at 4-5, 44 (D. Mass. Dec. 6, 2016).
9 Id. at 4-5. Subsys is administered by spraying the liquid, fentanyl-based formula under the tongue. Id. at 4-5.
10 Id. at 5. These marketing events were known as the “Speaker Program” in which Insys intended to increase awareness through educational lunches and dinners by having practitioners present on the use of Subsys for treating cancer pain. Id. at 11. Practitioners were paid for these “speaking events” even if no one showed up, and the sales representatives would forge the names of attendees on a sign-in sheet. Id. at 16.
11 Id. at 14. For example, Practitioner #1 received about $24,000 in bribes and kickbacks between August and December 2012. Id. at 22. By May 2015, Practitioner #1 received checks totaling $229,640 in bribes and kickbacks for prescribing Subsys. Id. at 22.
12 Id. at 16.
13 Id at 6, 9.
14 Id. at 6, 9. Public insurers includes both Medicare and Medicaid. Id. at 9.
15 Id. at 17.
16 Id. at 6.
17 Id. at 6.
18 Id. at 6.
19 Id. at 18. Employees within the reimbursement unit also received bi-weekly bonuses if they met a goal number of approvals. Id. at 19.
20 Id. at 18.
21 Id. at 6. No exact amount of profit earned by Insys as a result of this conspiracy was provided.
22 Nate Raymond, Former Insys CEO Pleads Guilty to Opioid Kickback Scheme, Reuters (Jan. 9, 2019); Nate Raymond, Former Insys Executive Pleads Guilty to Opioid Bribe Scheme, Reuters (Nov. 28, 2018).
23 Raymond, Former Insys Executive Pleads Guilty. Sentencing is scheduled for May 29, 2019 before Judge Allison D. Burroughs. Press Release, United States v. Michael Babich, Alec Burlakoff, Richard Simon, Sunrise Lee, Joseph Rowan, and Michael Gurry, John Kapoor, U.S. Attorney's Office for the District of Massachusetts (Jan. 28, 2019).
24 Raymond, Former Insys CEO Pleads Guilty. Sentencing is scheduled for May 30, 2019 before Judge Allison Burroughs. Press Release, supra, note 6.
25 Villani, Chris, ‘We're All Going to Jail,’ Ex-Insys CEO Says He Heard at Work, Law 360 (Feb. 15, 2019)Google Scholar.
26 Id.
27 Id.
28 Raymond, Former Insys Executive Pleads Guilty; Janelle Lawrence, Jurors Told How Insys Chief Used Competitors' Data to Drive Own Opioid Sales, Bloomberg (Mar. 7, 2019).
29 Lawrence, supra note 28.
30 Id.
31 18 U.S.C. § 1962(d) provides that “[i]t shall be unlawful for any person to conspire to violate any of the provisions of subsection (a), (b), or (c) of this sections.” See First Superseding Indictment, United States v. Michael L. Babich, et al., 1:16-cr-10343-ADB (D. Mass. Oct. 24, 2017).
32 Pub.L. 91-452, 84 Stat. 941 (1970) (codified at 18 U.S.C. §§ 1961-1968).
33 United States v. Turkette, 452 U.S. 576, 592-93 (1981).
34 Greene, Thomas M., A New Weapon in Pharma Cases, 47 Trial 40 (Nov. 2011)Google Scholar.
35 Id.
36 Id. (citing In re Neurotonin Mktg. & Sales Pracs. Litig. (Neurotonin III), 478 F. Supp. 2d 34 (D. Mass. 2010); Kaiser Found. Health Plan, Inc. v. Pfizer, Inc., No. 04-CV-10739 (D. Mass. Mar. 25, 2010)).
37 Id. at 43.
38 Id. at 43.
39 Id. at 43.
40 Jef Feeley and Janelle Lawrence, Judge Questions Racketeering Charges Against Insys's Kapoor, Bloomberg (July 17, 2018).
41 Id.
42 Id. (quoting Honorable Judge Allison D. Burroughs, District of Massachusetts).
43 Id. (quoting Nathaniel Yeager, Assistant U.S. Attorney for the District of Massachusetts).
44 Id.; 18 U.S.C. § 1961(1).
45 Salinas v. United States, 522 U.S. 52, 62-63 (1997). In order to show a pattern of racketeering activity, the prosecution or plaintiff must prove two of the qualifying predicate acts for RICO, and that those acts were undertaken in furtherance of the conspiracy. 18 U.S.C. §§ 1961(1); 1961(5).
46 Salinas, 522 U.S. at 63. All that is required is that the conspirator agreed or adopted the goal of furthering the criminal enterprise or endeavor. Id. at 65. “Racketeering activity” includes the act or threat of murder, kidnapping, extortion, bribery, arson, dealing in a controlled substance or chemical, embezzlement, fraud, wire fraud, obstruction of justice, economic espionage, facilitating murder-for-hire, and the felonious manufacture, importation, receiving, etc. of a controlled substance or chemical. 18 U.S.C. § 1961(1).
47 See Lacey, Civil Practice and Litigation Techniques in Federal and State Courts Civil RICO Update, SE99 ALI–ABA 301 April 13, 2000.
48 Id.
49 Greene, Thomas M., A New Weapon in Pharma Cases, 47 Trial 40, 42 (Nov. 2011)Google Scholar; see also Holmes v. Secs. Investor Protec. Corp., 503 U.S. 258, 268 (1992) (explaining causation requirement for civil RICO claims).
50 18 U.S.C. §§ 1963(a), 1963(b); Office of General Counsel, U.S. Sentencing Commission, RICO Guideline 7 (May 2018).
51 18 U.S.C. §§ 1964-1968.
52 18 U.S.C. § 1963(a).
53 18 U.S.C. §§ 1961(1); 1961(5).
54 See Indictment, United States v. Michael L. Babich, et al., 1:16-cr-10343-ADB, at 6-7 (D. Mass. Dec. 6, 2016).
55 Id.
56 Id.
57 Medicare/Medicaid Fraud and Abuse Act, 42 U.S.C. § 1320(a)-7b(b) (2012).
58 False Claims Act, 31 U.S.C. § 3729 (2012); 42 U.S.C. § 1320(a)-7b(b).
59 Evan Hughes, The Pain Hustlers, N.Y. Times Magazine (May 2, 2018).
60 Id; see e.g., Press Release, Drug Maker United Therapeutics Agrees to Pay $210 Million to Resolve False Claims Act Liability for Paying Kickbacks, U.S. Attorney's Office for the District of Massachusetts (Dec. 20, 2017); Press Release, Manhattan U.S. Attorney Announces $370 Million Civil Fraud Settlement Against Novartis Pharmaceuticals for Kickback Scheme Involving High-Priced Prescription Drugs, Along with $20 Million Forfeiture of Proceeds from the Scheme, U.S. Attorney's Office for the Southern District of New York (Nov. 20, 2015); Press Release, Abbott Laboratories Pays U.S. $5.475 Million to Settle Claims That Company Paid Kickbacks to Physicians, U.S. Department of Justice (Dec. 27, 2013).
61 Hughes, supra note 58.
62 Id.
63 Id. citing Press Release, Biopharmaceutical Company, Cephalon, to Pay $425 Million & Enter Plea to Resolve Allegaton of Off-Label Marketing, U.S. Attorney's Office in Philadelphia (Sept. 29, 2008));
64 Former Insys CEO Pleads Guilty to Opioid Kickback Scheme, CNBC (Jan. 9, 2019).
65 Evan Hughes, The Pain Hustlers, N.Y. Times Magazine (May 2, 2018).
66 Id.
67 Id.