- By John Pacenti Palm Beach Post Staff Writer
Expensive dinners, a trip to a gun range, a paid vacation with a strip club outing and stock options. Those were the perks provided to a Palm Beach County doctor from a pharmaceutical company for prescribing the dangerous opioid fentanyl, a recently unsealed whistleblower lawsuit claims.
The lawsuit against Insys Therapeutics says the Arizona-based company even hired a dental hygienist for the sole purpose of providing sexual favors to unidentified male doctors so they would prescribe its fentanyl spray, Subsys.
The whistleblower action was filed by Maria Guzman, a former Insys sales rep working in West Palm Beach. She also claims Greenacres pain specialist Dr. Bart Gatz worked with Insys to falsify information to the government to get prescriptions paid for by Medicare.
“Sex, money, luxury items — nothing was out of bounds in Insys’ efforts to persuade doctors to prescribe Subsys without consideration of what was best for patients,” Guzman said in her only statement when her suit was unsealed in May.
“I could not keep silent, knowing how these off-label prescriptions endangered so many.”
The lawsuit shows how the company’s alleged pay-for-scripts fentanyl strategy took root in South Florida. The litigation was kept under wraps for five years until the U.S. Justice Department joined the cause in May.
“Your neighborhood was ground zero,” said California attorney Mark Kleiman, who represents Guzman.
The sales rep was on the ground floor when Insys rolled out its fentanyl spray, working for the company for the first 1½ years after Subsys was approved by the Food and Drug Administration. Her lawsuit adds a chapter to the Insys story, reported in April by The Palm Beach Post in the series “Pay to Prescribe, The Fentanyl Scandal.”
The Insys manager who put the strategy into action, according to court documents, was Alec Burlakoff, vice president for sales at Insys. The former high school guidance counselor in Boca Raton evolved into a pharmaceutical sales Svengali.
Today, Burlakoff, along with Insys’ founder, CEO and other top executives, face federal racketeering and fraud charges.
The rub for the Insys defendants is that Insys’ highly addictive medication is approved only for cancer patients and it is illegal to market it for other uses. Doctors paid to be speakers for Insys routinely prescribed it for back pain, migraines and other ailments, the criminal complaint and numerous lawsuits allege.
While fentanyl is a tightly controlled medical treatment, often used in hospitals, the illegal form of the drug is fueling record numbers of overdose deaths nationwide.
Guzman’s lawsuit focuses mainly on two Palm Beach County doctors:Gatzand Lisa Banchik of Boca Raton. They received $229,000 and $72,000, respectively, in 2½ years through a speaker event program federal prosecutors say Insys used to illegally bribe physicians to prescribe Subsys.
The whistleblower complaint claims Gatz benefited from the strip club and gun range outings, stock options and expensive meals dinners courtesy of Insys — including buying Thanksgiving dinners for Gatz’s office staff.
Gatz was one of the top prescribers of Subsys in the nation from August 2013 through 2015 and No. 7 on the money list for speakers fees, federal data shows. Banchik ended up scurrilously derided by Burlakoff for not writing enough prescriptions for the fentanyl spray, according to the whistleblower complaint. Yet, she was among the top 20 Florida doctors receiving speakers fees from Insys during that time period.
Neither Gatz nor Banchik has been charged with any crime, and their disciplinary records are clean. Gatz, however, confirmed in March that he is one of 10 unidentified doctors named as “co-conspirator practitioners” in the criminal case against Insys executives.
‘I didn’t do anything wrong’
Gatz declined to address Guzman’s allegations but in a previous interview with The Post, the doctor said he didn’t break the law.
The Greenacres pain specialist and anesthesiologist said he has been unfairly lumped in with doctors who have been criminally charged with taking Insys kickbacks. Unlike those doctors, Gatz said, he spoke on behalf of the fentanyl spray legitimately.
He said 70 percent of his patients suffered from cancer. The other Subsys patients, he said, were recovering from major surgery.
“All I did was treat my patients. I didn’t do anything wrong,” Gatz said.
Guzman’s complaint appears to contradict that statement.
Insys had set up a reimbursement center — really a glorified call room — to help secure prescription approvals, prosecutors claim. Guzman said Gatz worked with the center to submit false information to the Centers for Medicare and Medicaid Services to get approval for at least one Subsys prescription.
Gatz told the government that a patient of his suffered pain from a cancerous tumor when in fact he suffered routine pain in his joints, according to the complaint.
The Guzman lawsuit is part of an avalanche of civil litigation from attorneys general in several states, Insys stockholders, former patients who got addicted and families who lost loved ones to Subsys.
Insys’ business plan worked wonders for the bottom line: $650 million in revenues over a three-year period.
It was also a deadly business.
The Post found the company reported to the federal government at least 908 deaths over five years in which its product Subsys was the primary suspected cause.
The whistleblower complaint caught the attention of one lawyer representing the family of a New Jersey woman who died from a Subsys overdose.
“The allegations made in Maria Guzman’s whistleblower complaint are disturbing,” Richard Hollawell said. “It is not difficult, reading the facts laid out in the complaint, to understand how the Justice Department has indicted the top executives responsible for oversight of the company and its employees.”
Because of the pending criminal case against Burlakoff and others, a California federal judge put Guzman’s whistleblower lawsuit on hold. Nine states have joined her in suing Insys under the False Claims Act, which, if they win, allows the government to recoup up to three times the amount of money it lost due to fraudulent claims.
Already, numerous states have sued Insys to recoup the money they say was defrauded from Medicaid, but Florida has stayed on the sidelines. Attorney General Pam Bondi’s office, which recently sued several opioid manufacturers, said it is still investigating whether to sue.
While doctors elsewhere in the country have been charged or convicted for prescribing the fentanyl spray for kickbacks from Insys, physicians in Florida largely have escaped felonies. This appears to be changing. Dr. Michael Frey of Fort Myers pleaded guilty in June to conspiring to receive kickbacks through Insys’ speaker program.
It took some time for the Justice Department to catch up with Insys. It declined in 2012 to take up a similar whistleblower lawsuit out of Texas, which also focused on Burlakoff. Guzman’s lawsuit, filed in 2013, got federal prosecutors’ attention as they built their criminal case against the company’s executives and Kleiman said pressure from a judge made the department unseal the complaint in May.
“Courts get uncomfortable when a case remains sealed when the government obviously has pretty much wrapped up its investigation,” Guzman’s attorney said. “I am guessing that the court did not focus on the impact that the pending criminal trials would have on the Insys’ witnesses’ inability to testify in the civil cases.”
The former sales rep’s 129-page complaint portrays Insys as a company whose corporate compliance seemed to be inspired by some rogue fraternity.
Burlakoff, who loved “The Wolf of Wall Street,” seemed to adopt that film’s portrayal of the banking industry’s sexist culture for Insys’ own.
“Insys maintains a work environment in which the male-dominated executive and management team frequently sexually treat females doctors who fail to prescribe ‘enough’ Subsys … with blatant disrespect,’” Guzman claimed.
In a curse-filled and lewd text message to Guzman, Burlakoff ranted about how Banchik wasn’t writing enough Subsys prescriptions in exchange for her speaker fees. “I hate that stupid (expletive),” Burlakoff wrote in the text message quoted in the complaint.
Burlakoff, according to Guzman, would do “ride-alongs” with his sales reps. “Those representatives with pharmaceutical experience were alarmed by what they saw and heard Burlakoff do,” the complaint states.
Insys hired extremely attractive female sales representatives who never had any experience in the pharmaceutical industry, the suit claims. Sunrise Lee worked as an exotic dancer at Rachel’s in West Palm Beach before landing a job as a sales executive at Insys. She also ran an escort service and was described by Burlakoff as “a closer.”
‘Dumb as rocks’
Guzman said she had no experience selling pharmaceuticals when hired by Insys. She described a dental hygienist as someone Insys hired to have sexual relations with doctors in exchange for Subsys prescriptions.
Joe Rowan, the southeast regional sales manager, told Gatz that the hygienist “was dumb as rocks but that she was sleeping with another doctor and getting a lot of prescriptions out of him,” according to the lawsuit.
During the April 2013 national sales conference Rowan publicly stated that the hygienist had been “out there working it” in regards to forming relationships with doctors, Guzman recalled in the lawsuit.
Gatz was the first doctor Burlakoff targeted when he was hired by Insys in 2012. Rowan would join Burlakoff in showering Gatz with perks, the whistleblower action states.
After Gatz earned $36,000 in speaker fees in one quarter, Insys treated him to a trip out to Arizona, which included an outing to a strip club. There the company paid for two $500 champagne room sessions, the lawsuit claims. Champagne rooms are often private sessions where the dancer can be one-on-one with her customer.
Rowan told Gatz, who operates Comprehensive Pain of the Palm Beaches, “You show loyalty to us like no other. You need anything at all, it is done.”
Gatz responded, according to the suit, by saying, “Thank you for the best weekend in years.” He then wrote 17 prescriptions for Subsys in three days, according to court documents.
Guzman claimed Gatz was also offered stock options from Insys, and the doctor had indicated he wanted to work for the company in Arizona.
In early February 2013, Rowan sent text messages to Gatz asking, “Would you like to get a bite to eat? Somewhere spectacular! Maybe shoot guns before?” Around Feb. 19, they went to a shooting range.
‘She doesn’t produce’
If Gatz was Burlakoff’s golden calf, Banchik was his problem child, according to the lawsuit.
When concern about her speaking ability came up in December 2012, Burlakoff told Guzman in a phone text not to worry: “They do not need to be good speakers, they need to write a lot of Subsys.”
Banchik also was treated to nights out by Guzman, who provided a text message sent by the Boca Raton neurologist on Aug. 16, 2012, thanking the sales rep for a “fun night” and saying other doctors would refer patients to her to write Subsys prescriptions.
In September 2012, Banchik complained she wasn’t getting paid for her speaker programs and wasn’t happy with Burlakoff. Banchik’s Neurology of the Palm Beaches does not specialize in cancer treatment and because of that, she ran into trouble getting Medicaid authorization for Subsys, the whistleblower suit states.
Burlakoff quickly turned on Banchik, according to the lawsuit, telling Guzman that Banchik “is taking you for a ride. She doesn’t produce (expletive) for units or dollars.” Burlakoff then tells his sales rep that Banchik won’t get any more speaking programs unless she produces like Gatz.
“Gatz has truly earned them,” Burlakoff writes. “Show her the numbers!”
Guzman said Insys asked her to get Banchik to alter office notes to show that a patient who had post-operative knee pain actually had cancer. Insys obtained approval for the patient through CMS by using the patient’s past history of cancer.
A person answering the phone at Banchik’s practice said the doctor wasn’t interested in commenting and hung up.
Whistleblower’s last straw
There is one other Palm Beach County physician who surfaces in Guzman’s complaint: Dr. Stuart Krost of Lake Worth. The sales rep says Insys offered Krost $100,000 “for his support of Subsys.” However, there are no records at this time to indicate Krost took the bait. Data from the Centers for Medicare and Medicaid Centers shows Krost has taken less than $40 from Insys since 2013. Krost declined to comment.
Insys fired Guzman in July 2013 after she filed the lawsuit. What made Guzman turn on her company? She said it was when she learned Insys had contracted with a mail-order pharmacy to deliver Subsys to a patient’s front door.
“Dropping these narcotics off on people’s doorstep, plus the incredible no-way-to-describe-it working environment, she really began to question the safety and legality of Insys,” Kleiman said.
Insys insisted in March that it had replaced 90 percent of key staff and is cooperating with an investigation by the U.S. Department of Health and Human Services’ Office of the Inspector General.
It declined to comment on the Guzman lawsuit.
Even though the criminal case against Burlakoff and other Insys managers has delayed Guzman’s case, she said she believes it is important to put the pharmaceutical executives in prison so other companies don’t think they can just pay a fine and get away with illegal activity, her attorney said.
“The government has chosen to criminally prosecute these people. If real change is going to come, there is no way Insys can pay enough money back to get everybody’s attention so effectively,” Kleiman said.