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United States v. Michael Babich, Alec Burlakoff, Richard Simon, Sunrise Lee, Joseph Rowan, and Michael Gurry, John Kapoor

Docket 16-cr-10343-ADB

On December 6, 2016, the defendants, former executives and managers of Insys Therapeutics Inc., were charged by indictment by the United States Attorney’s Office for the District of Massachusetts with conspiracy to commit racketeering, mail and wire fraud, and conspiracy to violate the anti-kickback law in relation to a nationwide conspiracy to bribe medical practitioners to unnecessarily prescribe a fentanyl-based pain medication and defraud payers of the medication, including insurers. The indictment alleges that Michael L. Babich, 40, of Scottsdale, Ariz., the former CEO and President of the company; Alec Burlakoff, 42, of Charlotte, N.C., former Vice President of Sales; Richard M. Simon, 46, of Seal Beach, Calif., former National Director of Sales; former Regional Sales Directors, Sunrise Lee, 36, of Bryant City, Mich. and Joseph A. Rowan, 43, of Panama City, Fla.; and former Vice President of Managed Markets, Michael J. Gurry, 53, of Scottsdale, Ariz., conspired to bribe practitioners in various states, many of whom operated pain clinics, in order to get them to prescribe a fentanyl-based pain medication, called Subsys.  Subsys is a powerful narcotic intended to treat cancer patients suffering intense episodes of breakthrough pain.  In exchange for bribes and kickbacks, the practitioners wrote large numbers of prescriptions for the patients, most of whom were not diagnosed with cancer.
 
The indictment also alleges that the now former corporate executives charged in the case conspired to mislead and defraud health insurance providers who were reluctant to approve payment for the drug when it was prescribed for non-cancer patients.  They achieved this goal by setting up the “reimbursement unit” which was dedicated to obtaining prior authorization directly from insurers and pharmacy benefit managers.  More information can be located by reviewing the Indictment and Press Release.

On January 5, 2017, the defendants appeared before the magistrate in federal court for their initial appearance and arraignment.  The defendants have all pled not guilty and have been released on conditions approved by the court.

On October 24, 2017 a superseding indictment was filed added the defendant John N. Kapoor.

Case Status

Next court date: The Initial Appearance & Arraignment Hearing as to John Kapoor is set for November 16, 2017 at 11:15 a.m. in Courtroom 14 before Magistrate Judge Jennifer C. Boal.

Motion Hearing scheduled for December 19, 2017 at 3:30 p.m. to a Status Conference to be held in Courtroom 14 before Magistrate Judge Jennifer C. Boal.
 
There will be several status conference hearings scheduled over several months.  The purpose of status conference hearings is to inform the court on how the case is proceeding and to advise on any issues relating to the discovery (or evidence).  Status conferences are held approximately every 6-8 weeks until the court is satisfied that the case is ready for trial or a defendant wishes to change their plea from not guilty to guilty.  This site will provide updates on the status of this case.

Victims

If you were prescribed the fentanyl-based pain medication Subsys, a powerful narcotic intended to treat cancer patients suffering intense episodes of breakthrough pain, between March 2012 and December 2016, please complete a brief questionnaire found on the FBI Victim Assistance website at https://subsys.ic3.gov/   Responses are voluntary but would be useful in the federal investigation and to identify you as a potential victim. Based on the responses provided, you may be contacted by the FBI and asked to provide additional information.

Documents

Updated November 14, 2017

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