Doctor should face trial over Insys opioid kickbacks despite bankruptcy, US says

(Reuters) - A Florida doctor accused of taking kickbacks from Insys Therapeutics to prescribe its fentanyl spray should face a civil trial despite his recent bankruptcy, federal prosecutors are arguing, even as a judge delayed it from going forward.

In a filing Wednesday in Tampa federal court, lawyers for the Middle District of Florida U.S. Attorney's Office said their civil lawsuit against Edward Lubin stems from the government's "police or regulatory power," and so was not automatically paused like most legal claims against a newly bankrupt debtor.

They noted that federal appeals courts in other cases have ruled that lawsuits brought by the government under the federal False Claims Act, like the one against Lubin, are examples of police or regulatory power.

Lubin had notified the court of his Chapter 11 bankruptcy earlier on Wednesday, saying it should halt the case. His lawyer did not immediately respond to a request for comment.

U.S. District Judge Thomas Barber, who is presiding over the case, said in an order on Thursday that he would wait for the bankruptcy court to decide whether the trial can go forward. For now, he put the Aug. 2 trial date on hold.

It would be a rare civil trial under the False Claims Act for a doctor caught up in the kickback scandal involving the defunct Arizona-based drugmaker, which filed for bankruptcy in 2019 following a settlement with the U.S. Justice Department.

Dozens of other doctors and former executives and employees of Insys have separately faced criminal charges over a scheme centered on Subsys, an opioid medication approved for treating severe pain in cancer patients.

They include the company's founder, John Kapoor, who was sentenced to five and a half years in prison in 2020 and was released last month after serving two years.

Lubin was not criminally charged but instead was the target of a civil lawsuit in 2021. The government alleged that from 2013 to 2017, Lubin took nearly $160,000 in kickbacks from Insys through a sham speaker program in which he purportedly gave presentations educating other medical providers about Subsys.

Federal prosecutors said Lubin was paid between $1,600 and $3,700 for each speaking event, even though some consisted of brief conversations with non-doctors, or never occurred at all. While taking these kickbacks, they said, Lubin became a top prescriber of Subsys.

Those prescriptions resulted in claims being submitted to the federal Medicare and TRICARE health insurance programs. Because those claims were tainted by kickbacks, they were fraudulent, the government said.

The government is seeking as much as $12.8 million in damages plus penalties that could go as high as $11.2 million. Lubin denies wrongdoing.

The case is United States v. Lubin, U.S. District Court for the Middle District of Florida, No 8:21-cv-2231.

For the government: Assistant U.S. Attorney Jeremy Bloor

For Lubin: Dale Sisco of Sisco-Law in the civil lawsuit and Edward Peterson of Johnson Pope Bokor Ruppel & Burns in bankruptcy court

Read more:

Insys founder Kapoor sentenced to 66 months in prison for opioid scheme

Opioid manufacturer Insys files for bankruptcy after kickback probe

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